FRANKFURT, Germany — Inflation in Europe’s euro zone countries is hitting double digits as electricity and natural gas prices soar, signaling a looming winter recession for a major economy. Worldwide, while higher costs undermine the population’s consumption power.
Consumer prices in the 19 countries that use the euro rose a record 10% year-on-year in September and posted an annual increase of 9.1% in August, the European Union’s statistics office Eurostat reported on Friday. Just a year ago, inflation was 3.4%.
Price increases are at their highest level since euro records began in 1997.
The main reason for this was energy prices, which rose by 40.8% compared to the previous year. Food, alcohol and tobacco rose 11.8%.
Inflation was driven by continued cuts to Russia’s natural gas supplies and shortages in the procurement of raw materials and spare parts as the global economy emerges from the COVID-19 pandemic. Russian cuts have pushed gas prices so high that energy-intensive companies like fertilizer and steel say they can’t make a profit on their products.
Meanwhile, high prices for electricity bills, food and fuel are leaving consumers with no money to spend on other things. That’s the main reason economists are predicting a recession, or a drastic and permanent decline in economic activity, late this year and early next year.
European officials assert that Russian exporter Gazprom’s gas pipeline cuts are energy blackmail aimed at pressuring and dividing European governments over Western sanctions against Russia and its support for Ukraine, including arms supplies.
Higher gas prices lead to higher heating costs and higher electricity costs because natural gas is used to generate electricity, heat homes and run factories.
Prices in Germany, the largest economy among the 19 countries that use the euro, rose 10.9%, reaching double digits for the first time in decades. Germany wants to invest up to 200 billion euros to help consumers and companies cope with higher gas prices.