Due to a rise in energy prices, Euro zone inflation hits maximum in 13 years

Eurozone inflation hit its maximum in 13 years in September since the bloc struggles with rising energy prices.

Headline inflation came in at 3.4% last month, as per primary data from Europe’s statistics office Eurostat. This was the maximum since September 2008 when inflation stood at 3.6%. It appears after German buyer costs rose by 4.1% in September — the maximum in about 30 years.

The increase has been driven above average by rising energy prices, heightening concern amongst policymakers. The front-month gas price at the Dutch TTF hub, a European benchmark, has grown almost 400% since the start of 2021.

This record run in energy costs is not likely to come to an end any time soon. Energy analysts caution market uneasiness is possible to continue throughout winter.

France has come to be the most recent nation in order to step up ways in order to mitigate the costs for consumers. Prime Minister Jean Castex says on Thursday that the government would be preventing further natural gas cost surges. This is along with surges in electricity bills. However, before these actions kick in, gas rates will go up by 12.6% for French buyers as of Friday.

The following countries have also taken steps in order to address the price boosts –
  • Italy
  • Greece
  • Spain

Is it temporary?

Central bankers are of the belief that current spikes in inflation are “temporary” and that cost tensions will ease in 2022.

“We have been adjusting upward many of our forecasts in the last three quarters. Things have picked up faster and that is genuine for the following –
  • Growth
  • Inflation
  • Employment

The above is stated by European Central Bank President Christine Lagarde.

However, some economists are asking whether all of the price stresses are temporary — and if the central bank requires in order to adapt monetary policy more swiftly.

Analysts anticipate the ECB in order to provide more details about its monetary policy stance at a meeting in December. Its virus crisis purchase program, known as PEPP, is due to end in March. ECB observers predict a decline in the level of purchases in the last months of the program.

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