Before I explain the significance of the 10.7%, let me explain what the Eurozone is for those of you who have heard about it for the first time. The eurozone is a group of 19( Actually speaking its 18 because the UK is planning to completely leave soon) countries of Europe that have fully implemented integration into the European Union and adopted the euro as their primary currency.
This economic zone has suffered from sharp increases in consumer prices While the Russian invasion of Ukraine and it decision to reduce gas supplies to Europe is one main reason, the other reason is that zone has also not done a good job itself keeping prices down. The zone has kept interest rates too low for too long. When interest rates are low people have additional cash at their hands and spend it causing prices to go up. EU now has a burning fireball of inflation on its hands and is struggling to bring inflation down. Yes its now at a staggering 10.7%. It has got worse. It was 9,4% last month.
I really think Europe needs to look for look for alternate gas sources and most importantly stop the slow trickle of interest rate hikes and start doing larger fewer hikes ones and now. Otherwise EU will suffer from Stagflation,, Stagflation means an a extended period of time characterized by slow growth and a high unemployment rate accompanied by unmanaged inflation
The reason why we in the US should watch carefully is because the US is not far behind in its inflation pain and the way EU handles itself will leave us a few thing to proactively act upon
The annual rate of consumer-price inflation in the eurozone increased to double digits in October, reaching a record and highlighting the challenges facing the European Central Bank after it signaled a coming slowdown in the pace of its rate increases.
The broad measure of consumer prices has risen sharply since Russia’s invasion of Ukraine and Moscow’s decision to throttle natural gas supplies to Europe to undermine Western support for Kyiv. By mid-September, Russia had cut its supplies by 80% of their year-earlier total.
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Europe has had to look elsewhere for gas supplies, and paid much higher prices. While storage levels are now high, and gas prices on world markets have fallen from their peaks, household energy bills lag behind those moves and are much higher than a year earlier, as are food prices.
As a result of these pressures, inflation in the region has overtaken the level in the U.S. Now it is fueling demand for higher pay in the most affected countries, which could in turn feed into further price rises.