The rate of inflation in the Euro area touched 10% on a YoY basis, while it was only around 9.10% during August. A lot of experts were expecting the inflation to be around 9.7%, but a reading of 10% has raised alarm balls and left the ECB out of options.
Some of the items which saw a faster increase in prices include tobacco, food, energy, services, and industrial goods. Basically, all the major sectors contributed to the inflation and have thus put additional pressure on the European Central Bank. Experts believe that this will further intensify the economic crisis in the Euro area and will make things even more difficult for the central bank.
In Germany, the inflation numbers have also entered double digits, which contributed to the higher inflation in the overall Euro area as well.
In August, the inflation number was only 7.9% on a YoY basis in Germany. But the recent inflation reading was 10% which is the same as the inflation in the broader Euro area.
Many experts believe that the jump in inflation was nothing out of the blue... After the end of the energy relief package, it was only natural for the inflation reading to print higher. However, the thing which took the analysts off guard was the intensity of the increase in inflation!
If we look at France, the latest inflation reading was 6.2% which was around 6.6% in August. However, experts believe that the inflation reading might not be a true indication of the situation on the ground. Although the prices of services and energy declined, the food-driven inflation was actually accelerated.
Experts believe that the reading shows that inflation is domestically driven and a lot more entrenched than initially thought! However, the inflation reading in France is still lower than that of Germany or other countries!