Inflation reaches 9.1% in countries using the euro


LONDON — Inflation in European countries using the euro hit a new high in August, fueled by soaring energy prices mainly caused by Russia’s war in Ukraine.

Annual inflation in the 19 euro zone countries reached 9.1%, against 8.9% in July, according to the latest figures published on Wednesday by the European Union statistics agency Eurostat.

Inflation is at its highest level since the euro began recording in 1997. The latest figures add pressure on European Central Bank officials to keep raising interest rates, which can control inflation, but also stifle economic growth.

Prices are rising in many other countries as Russia’s war in Ukraine continues, triggering unprecedented increases in energy and food that are straining household finances. Disruptions to global manufacturing supply chains caused by the coronavirus pandemic also played a role in driving up prices. This summer has seen a wave of protests and strikes around the world by workers demanding higher wages and people who are fed up with the high cost of living.

Inflation in Britain, Denmark and Norway, which have their own currencies, is also on the rise, according to official data released earlier this month. UK residents face an 80% rise in their annual home energy bills, regulators warned last week.

Inflation is also high in the United States, adding to the urgency for the Fed to keep raising interest rates. Prices rose 8.5% in July from a year earlier, down from 9.1% in June.

In the euro zone, energy prices jumped 38.3%, although the rate was slightly lower than the previous month, while food prices rose at a faster rate of 10.6%, according to Eurostat’s preliminary estimate. The agency’s final report, released about two weeks later, is generally unchanged.

“Specific European issues continue to push inflation higher,” Bert Colijn, senior economist at ING Bank, wrote in an analyst note. “The gas supply crisis and droughts add to the lingering supply-side pressures on inflation at the moment.”

Russia, a major energy producer, cut the flow of gas to European countries that sided with Ukraine in the war, a move that wreaked havoc on prices.

At the same time, almost half of Europe has been hit by an unprecedented drought that has damaged agricultural economies, dampened the production of staple crops like maize and pushed up food prices.

Price increases for manufactured goods such as clothing, appliances, cars, computers and books accelerated to 5%, and the cost of services rose 3.8%.

Another factor keeping prices high is the weak Euro. The currency has slipped below parity with the dollar, which can make imported goods more expensive, especially oil, which is priced in dollars.


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