Record energy prices drove the inflation rate for the countries using the Euro currency to a record 8.6% in the year through June.
“Euro area annual inflation is expected to be 8.6% in June 2022, up from 8.1% in May according to a flash estimate from Eurostat, the statistical office of the European Union,” said Eurostat.
“Looking at the main components of euro area inflation, energy is expected to have the highest annual rate in June (41.9%, compared with 39.1% in May), followed by food, alcohol & tobacco (8.9%, compared with 7.5% in May), non-energy industrial goods (4.3%, compared with 4.2% in May) and services (3.4%, compared with 3.5% in May).”
Inflation has risen steadily for more than a year, fuelled by post-pandemic supply shocks and now by energy prices amid the fallout of Russia’s war on Ukraine.
The European Central Bank (ECB) has said it will do whatever it takes to bring inflation back to its target level.
Alastair George, chief investment strategist at the financial research firm Edison Group, said: “It may be a difficult day in the office for ECB policymakers, with annual inflation at 8.6% more than four times the 2% target – but it is even more difficult for low-income consumers facing 40% increases in energy prices.”
Fabio Panetta, a European Central Bank executive board member, said: “This surge in prices does not reflect excess demand in the euro area.
“Consumption and investment remain below their pre-pandemic level and even further away from their pre-pandemic trend.
“With wages rising at a moderate pace, real incomes have been severely hit by the surge in import prices.”