LONDON (Financial Times) - Inflation in the eurozone has risen to its highest level in almost a decade, increasing pressure on the European Central Bank to slow the pace of its bond purchases.
Driven up by the region’s recent economic rebound, August’s jump in the eurozone’s harmonised index of consumer prices to 3 percent from a year earlier was up from 2.2 per cent in July. The rise exceeded the expectations of most economists.
Consumer prices have not risen as fast in the 19-country bloc since November 2011 when the ECB had just raised interest rates for the region, the last time it did so.
Prices in August increased or were flat year-on-year in every eurozone country. The highest inflation rates of between 4.5 and 5 per cent were in Estonia, Lithuania and Belgium. Only four eurozone countries now have inflation below 2 per cent, down from 16 countries in March.
The price increases were driven by the economic rebound from the impact of the pandemic, higher energy costs, the reversal of last year’s German cut in value added tax and bottlenecks in supply chains. They also partly reflect last year’s delayed start to summer clothing sales in France and Italy, which were on time this year meaning prices are higher in comparison.
Germany’s Bild newspaper decried the “new inflation shock” in a front-page headline on Tuesday after the country’s inflation rate hit a 13-year high.