The Inflation in the Eurozone has continued to increase tremendously in the past few months. The inflation in the area, which was in the negative before the COVID-19 pandemic, has recently recorded an increase of over 11 percent. In addition, core inflation also rose 5%, excluding the energy and food prices which have been soaring the most.
The European Central Bank (ECB) has taken action to combat this inflation by raising interest by 200 basis points, the fastest rate ever recorded. As a result, spending has become more costly for all 19 European countries using the euro as the interest rates have been hooked for the third time this year.
Due to these high-interest rates by the ECB, Europeans have begun to take advantage of promo sites like promocodius.co.uk that offer massive discounts on all sorts of household and food items. However, this inflation continues to be a pain to many European countries.
The Reasons Behind the Inflation Rate
Energy costs continue to be at the core of the soaring inflation rates. Earlier in the year, the energy prices in Europe and many other parts of the world had increased significantly. The main reason for it is the Russian invasion of Ukraine, which caused an unprecedented situation. This geopolitical tension took its toll on all of Europe, as Russia exports 40% of the natural gas in the entire continent.
In addition, European countries still deal with COVID-19 consequences. Lockdowns also led to an increased price of products, especially food, which has been aggravated in the current situation. Hence, the ECB has continued to hike interest rates and might continue to do so in an attempt to stabilize the cost of living across European countries.
Impacts on Europeans
With winter rapidly approaching, inflation is taking its toll on the Eurozone as euro-spending countries now have reduced spending power while living costs continue to increase. Most of the countries in the Eurozone have recorded double-digit inflation rates in the past two weeks, with Italy experiencing the highest monthly surge in price.
According to the Office for National Statistics, the UK’s largest independent producer of official statistics, the inflation in the UK has surged back to the 40-year high rate recorded in July. The organisation’s research shows that the Consumer Prices Index (CPI) increased by 11.1% in the 12 months to October 2022 compared to 10.1% in September 2022.
But there is also good news. The worst is behind! European Commission and ECB predict that inflation is slowing down and the situation will gradually stabilize in 2023-2024.