EU inflation hits new record high of 9.8%

(CN) — The annual inflation rate in the European Union rose to a record high of 9.8% in July, according to data released Thursday by the bloc's statistics agency, while inflation among the eurozone countries also hit a new high of 8.9%.

Those are the highest inflation levels since Eurostat began recording statistics on the nations in 1997, and they mark a slight uptick from the record rates recorded in June. 

A year ago, the inflation rate in the eurozone - comprised of the the 19 nations that use the euro as their form of currency- was only 2.2%. Similarly, annual inflation among the 27 EU member states stood at just 2.5% in July 2021.

With Russia’s war with Ukraine raging on, the inflation rate for energy contributed the most to the eurozone’s rising economic struggles. The agency found that energy costs added 4.02 percentage points to the overall inflation rate.  

In July, Russia reduced its Nord Stream I pipeline, Europe's main natural gas pipeline, to 20% capacity. The move was made in response to sanctions placed on the country after it launched the invasion in February. Since July of last year, the cost of energy has been a primary contributor to the annual inflation rate. 

Another contributing factor to eurozone inflation is the cost of consumer goods. In July, food, alcohol and tobacco contributed 2.08 percentage points. Services and non-energy industrial goods contributed 1.60 and 1.16 points, respectively, to the annual inflation rate.   

Among all EU countries, Estonia is hardest hit with an annual inflation rate of 23.2% in July. Latvia follows with 21.3% and Lithuania is third at 20.9%. The sky-high inflation in these Baltic nations is seen as a symptom of the Russia-Ukraine conflict. Sanctioned trade routes and being geographically limited from the rest of the EU have largely contributed to their historic economic challenges.  

France and Malta are experiencing the lowest inflation rates in the union, with both recording an annual rate of 6.8% last month. 

Earlier this year, French officials passed a 25 billion euro ($25.2 billion) spending package to set caps on the price of gas and electricity and increase pension and welfare payments. This spending package has been credited for helping keep inflation low. 

Inflation in both the EU and the eurozone has been steadily rising since January 2021. The EU has closely outpaced the annual inflation rate of the eurozone both this year and last.

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