Eurozone inflation still at record high in October

21st November 2022 • News

Inflation in the eurozone was slightly lower in October than previously reported on a year-on-year basis. However, it is still at a record high because of surging energy prices, final data from Eurostat showed on Thursday.

The annual inflation rate came in at 10.6 percent, up from 9.9 percent in September, but 0.1 percentage point lower than originally estimated. Energy inflation stood at 41.5 percent in October, up from 40.7 percent in September. This was slightly below the initial estimate of 41.9 percent. Meanwhile, food, alcohol and tobacco rose by 13.1 percent from 11.8 percent.

“Looking ahead, we think eurozone inflation has peaked, but it will remain elevated for some time. All signs point to falling eurozone energy inflation over the coming months, due to the slump in gas prices and the shift in year-over-year basis effects, also in oil,” Melanie Debono, senior Europe economist at Pantheon Macroeconomics, said.

In the meantime, the UK government on Thursday unveiled a whopping £55 billion fiscal plan as it attempts to reduce the gaping government deficit and restore Britain’s economic credibility, even as the country is on the cusp of a recession.

In his autumn statement, UK Chancellor of the Exchequer Jeremy Hunt targeted the wealthy with higher taxes on wages and dividends, while extending a windfall tax on oil and gas companies, telling the House of Commons that he was prioritising “stability, growth, and public services”. These measures are expected to increase financial hardship on millions of Britons as they face the country’s worst cost-of-living crisis in decades and its longest-ever recession.

Finally, spending by Americans in shops and online increased more than expected in October as households purchased more goods, suggesting consumer spending picked up early in the fourth quarter, which could help support the economy.

Official data showed on Wednesday that retail sales in the US rose by 1.3 percent in October over September, up from a flat reading in September from August. The increase was led by car sales and higher fuel prices. Excluding cars and fuel, retail spending rose by a robust 0.9 percent in October.

The data illustrate that consumers are still resilient, making life more difficult for the Federal Reserve as it tries to bring inflation under control.