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Rising oil and energy prices sent the inflation in the euro zone to the highest in nearly six years in October, a flash estimate from Eurostat, the statistical office of the European Union (EU), showed on Wednesday.
Annual inflation in the 19 EU member states using the euro currency is expected to be at 2.2 percent in October, up from 2.1 percent annual inflation in September, with annual prices of energy soaring more than 10 percent, Eurostat said. The annual inflation rate in the euro area in October is the highest since December 2012.
Looking at the main components of euro area inflation, energy is expected to have the highest annual rate this month, at 10.6 percent, compared with 9.5 percent in the previous month, followed by food, alcohol and tobacco, services, and non-energy industrial goods, Eurostat said.
The core inflation in the euro area—that is excluding energy, food, alcohol, and tobacco—is estimated at 1.1 percent in October, up from 0.9 percent in September.
Rising energy prices this year also pushed inflation in Europe’s biggest economy, Germany, to the highest in more than six and a half years—at 2.4 percent in October, up from 2.2 percent in September, Germany’s statistics office said on Tuesday.
Rising oil prices have been translating into increasing energy prices across the world for several months, and oil officials and energy organizations have been warning that higher oil prices may start to destroy oil demand growth, especially in emerging countries.
Crude oil prices have gone up high enough to begin hurting demand for the commodity, the Executive Director of the International Energy Agency (IEA), Fatih Birol, said on Tuesday.
Birol noted that the adverse effect of higher oil prices on large emerging economies in particular, including India and Indonesia, saying, “Many countries’ current account deficits have been affected by high oil prices.”
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.