In the euro zone, price inflation weakened significantly in October and reached its lowest level in more than two years. The figures for economic strength are much clearer.
For some time now, energy and food prices have only been heading in one direction: upwards. The inflation rate in the eurozone is now at its lowest level in over two years. At the same time, inflation is leaving its mark on the economy. It shrank surprisingly in the third quarter.
Specifically, economic output in the Eurozone fell by 0.1 percent in the summer compared to the previous quarter, as the Eurostat statistics office in Luxembourg announced according to an initial estimate. On average, economists had expected gross domestic product (GDP) to stagnate. In the second quarter, the economy grew by 0.2 percent.
In a year-on-year comparison, the economy grew by 0.1 percent between July and the end of September. Economists had expected an increase of 0.2 percent.
On the other hand, inflation in the Eurozone weakened significantly in October: the annual inflation rate fell from 4.3 percent in the previous month to 2.9 percent, Eurostat also announced. The rate has not been this low since July 2021.
The core rate excluding the volatile prices for energy and food also fell – it fell from 4.5 to 4.2 percent. According to many economists, core inflation reflects basic inflation and therefore represents the inflation trend somewhat better than the overall rate.
Although food and beverages were still significantly more expensive than a year ago, the price increase weakened from 8.8 to 7.5 percent. Energy prices fell by 11.1 percent compared to the same month last year. The prices of industrial goods and services rose more weakly than in the previous month. Despite weaker inflation, the European Central Bank’s (ECB) medium-term inflation target of two percent is still being exceeded. Last year, the inflation rate was at times in the double digits as a result of the war in Ukraine.
Source: Stern
