Eurozone inflation hits record 8.1 per cent amid rising energy costs
Eurozone inflation hit a record 8.1 per cent in May amid surging energy and food costs fuelled in part by Russia's war in Ukraine.
Annual inflation in the 19 countries that use the euro currency soared past the previous record of 7.4 per cent reached in March and April, according to the latest numbers published Tuesday by the European Union statistics agency, Eurostat.
- Complete coverage of the war in Ukraine
- In major blow, EU bans imports of most Russian oil
- WATCH: One Ukrainian survivor shares what it was like being trapped in Mariupol for weeks
Inflation in the eurozone is now at its highest level since recordkeeping for the euro began in 1997.
Soaring prices are weighing on household finances and making it more urgent for officials to act quickly to head off further increases in the cost of living.
Energy prices jumped 39.2 per cent, highlighting how the war and the accompanying global energy crunch are making life more expensive for the eurozone's 343 million people.
"Energy inflation is likely to remain higher for longer than previously expected," after the European Union agreed to embargo most Russian oil imports by the year's end, said Andrew Kenningham, chief European economist at Capital Economics.
Brent crude oil, the international standard, rose to $120 a barrel after the agreement. Aimed at punishing Moscow for its war with Ukraine, the deal is a double-edged sword that could also magnify the pain for people and businesses already struggling to cope with higher energy costs.
Oil and natural gas prices had already spiked over fears the war would interrupt supplies from Russia, the world's largest oil exporter. Strong global demand following the COVID-19 pandemic and a cautious approach to increasing production from oil cartel OPEC have lifted energy prices.
Countries neighbouring Russia that have been weaning themselves off Russian gas were among the hardest hit. Estonia's inflation rate reached 20 per cent while in Lithuania it was 18.5 per cent and in Latvia it came to 16.4 per cent.
Food, alcohol and tobacco prices rose 7.5 per cent in May , Eurostat said -- another sign of how Russia's war in Ukraine, a major global supplier of wheat and other agricultural commodities, is pushing up prices around the world. Prices for goods like clothing, appliances, cars, computers and books rose 4.2 per cent. Prices for services increased 3.5 per cent.
Inflation is also a problem in other advanced economies like Britain and the U.S., where it's at the highest level in four decades.
In Poland, which doesn't use the euro, annual inflation in May jumped to a 24-year high of 13.9 per cent, the state statistical office said Tuesday. Higher fuel and food prices were the main drivers amid an economic boom prompted by the huge influx of Ukrainian refugees contributing to consumer demand.
The latest figures add pressure on eurozone officials to raise interest rates from ultralow levels to rein in the rising prices, though that risks stifling economic recovery. The European Union earlier this month slashed its economic growth forecast for the 27-nation bloc amid the prospect of a drawn-out Russian-Ukraine war and extended disruptions to energy supplies.
The president of the European Central Bank, Christine Lagarde, last week gave the clearest sign yet that rates will start rising soon, writing on a blog that she expects to "exit negative interest rates by the end of the third quarter."
The eurozone countries are Austria, Belgium, Cyprus, Estonia, Finland, France, Germany, Greece, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Portugal, Slovakia, Slovenia, Spain.
AP reporter Monika Scislowska in Warsaw, Poland, contributed to this report.
Get in touch
Do you have any questions about the attack on Ukraine? Email firstname.lastname@example.org.
- Please include your name, location, and contact information if you are willing to speak to a journalist with CTV News.
- Your comments may be used in a CTVNews.ca story.
opinion | Before you do your taxes, take note of these tax credits and deductions you may not have known about
Many Canadians are experiencing strains caused by the increased cost of living and inflation. In his exclusive column for CTVNews.ca, contributor Christopher Liew shares some of the top credits and deductions that you may be able to claim on your income tax return to help you save money.
opinion | How much rent can you afford?
Many Canadians have continued to see an increase in their rental rates in 2023. In an column on CTVNews.ca, personal finance contributor Christopher Liew explains how to calculate how much rent you can afford.
Canadians now believe they need $1.7 million in savings in order to retire, a 20 per cent increase from 2020, according to a new BMO survey. The eye-watering figure is the largest sum since BMO first started surveying Canadians about their retirement expectations 13 years ago.
With the spring break travel season approaching, those looking to flee the cold, wet Canadian snow for sunnier skies will likely be met with a hefty price tag for their getaway, with inflation and increased demand pushing costs up.
When selling a home, Canadians may be exempted from paying capital gains tax on a residential property -- if it's their principal residence. On CTVNews.ca, personal finance contributor Christopher Liew explains what's determined as a principal residence, and what properties are eligible for the exemption.
The Bank of Canada hiked its key interest rate by a quarter of a percentage point Wednesday, bringing it to 4.5 per cent. Here's a look at what the rate means, how analysts are interpreting it and what it could mean for consumers.
The federal government's latest TFSA contribution limit increase took effect as of January 1, 2023. Personal finance contributor Christopher Liew outlines how the government’s most recent TFSA contribution limit increase affects you and how to make the most of it.
Finding an affordable place to live in the territories, where housing has long been a challenge, is getting even harder, the Canada Mortgage and Housing Corporation suggested in a report released in December. In Yellowknife, the report said, the growing senior population, urbanization and strong labour market has pressured the housing supply.