Inflation in Eurozone hits record high in June amid COVID-19, Russia-Ukraine war: Report

Triggered by coronavirus lockdowns and sky rocketing fuel prices amid war in Ukraine, inflation in the Eurozone reached record high last month. In its latest report, EU’s statistics agency EuroStats said that prices of goods and services rose by 8.6% in June. The inflation rate was higher than the 8.1% surge in May, which itself was the highest rise since 1997 (two years after Euro was launched). 

The prices of consumer goods were particularly affected. As per the agency, the cost of food, alcohol and tobacco rose by nearly 9% annual rate last month. Prices of non-energy industrial goods showed a 4.3% inflation rate, 0.1 % higher than that in May. However, providing respite to consumers, prices of services cooled slightly from 3.5% in May to 3.4 % in June. 

"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)," Eurostats said.

_{Source: Eurostats}

EU bank plans to hike intrest rates later this month

As the European Central Bank plans to raise its interest for the first time in 11 years, Eurostats stated that energy prices rose at an annual rate of almost 42% in June. In May, the inflation rate of fuel was 39%. Prices of hydrocarbons have considerably risen across the European Continent as Vladimir Putin continues to turn off taps for major Eurozone economies. 

“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,” said Alastair George, chief investment strategist at financial research group edison firm, as reported by The Guardian.

_{Source: Eurostats}

Eurozone is a monetary union of 19 countries united by common currency-Euro- which is also the sole legal tender in the group. The euro area consists of Belgium, Germany, Estonia, Ireland, Greece, Spain, France, Italy, Cyprus, Latvia, Lithuania, Luxembourg, Malta, the Netherlands, Austria, Portugal, Slovenia, Slovakia and Finland. Notably, the euro area data refer to the country composition at a specific point in time. 

(Image: AP)