Eurozone Inflation Rises to 8.6 Percent, the Highest Ever

By contrast to the Baltics, France has a diversity of energy sources, which has helped keep its inflation rate comparatively low, at 6.5 percent. Although several nuclear reactors have been taken offline recently, the country is overall less reliant on fossil fuels, which has shielded it from the worst of the fallout from Russia’s war in Ukraine.

For the first time since 1985, the inflation rate in Spain soared into the double digits, hitting 10 percent. The high price of energy is largely to blame, along with increases in the price of food. The government in Madrid passed a 9 billion-euro ($9.45 billion) relief package, including subsidies for transport and a 80 percent reduction in taxes on energy, to help vulnerable households cope.

Germany’s inflation dipped to 8.2 percent over the year through June, from 8.7 percent the month before. Analysts pointed to government programs, including one encouraging use of public transit with a €9 monthly pass and a cut in the country’s notorious high tax on energy, as reasons for the dip but do not see the movement as a trend.

“In our opinion, there are still no compelling signs for the strong upward inflation spiral to lose steam any time soon” Deutsche Bank said in a research note, blaming persistent supply bottlenecks and energy price pressures.

Many of the countries in the eurozone’s east are particularly vulnerable to the fallout of the war in Ukraine, given supply chains and their histories of dependence on Russia for their energy needs. Slovakia, where inflation increased to 12.5 percent, is a prime example. It has imported nearly 90 percent of its natural gas and two-thirds of its oil from Russia and has struggled with the cost of sourcing energy from other countries.

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Disrupted global supply chains have also hurt auto production, which is the country’s most important industry.

Ireland’s inflation rose to 9.6 percent. Again, energy was the driving force for the increase in the country, where thousands took to the streets last month to to express their anger at the jump in prices.

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