The Eurozone’s inflation reached a 13-year high in October, creating more problems for the European Central Bank.
The prices in 19 euro-community countries rose to 3.4% annually in September, up from 3.3% a month earlier. This is the highest reading since September 2008.
The red-hot inflation rate was due to rising energy costs. Producer price inflation rose to 2.3% due to supply bottlenecks that pushed up shipping costs for businesses.
Inflation is a serious problem in rich countries, as supply chains are breaking down due to the demand for high-quality goods and services.
These disruptions seem to be worsening, raising the possibility that inflation may hump into underlying prices and become more stubborn than initially thought.
This week, the chiefs of the top central banks around the globe warned that the current string of high inflation readings is likely to continue.
Due to the speculation that the ECB’s wildly loose monetary policy position is stoking inflation, there are growing concerns about its effectiveness. It may also be inappropriate because the economy of the region has rebounded strongly after the Covid-19 crisis.
