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As energy prices soared, inflation in the eurozone accelerated in September to the highest level since 2008, data from the European Union’s statistical office Eurostat showed on Friday.
The annual inflation rate in the 19 countries of the euro area—including the largest EU economies Germany, France, and Italy—hit 3.4 percent in September 2021, up from 3.0 percent in August, a flash estimate from Eurostat showed.
Energy prices surged by 17.4 percent in September, compared with a 15.4-percent annual jump in August.
Among individual countries, inflation in Germany, Europe’s biggest economy, is expected to have accelerated to 4.1 percent in September from 3.4 percent in August.
Surging natural gas and power prices are the main drivers of inflation in the eurozone, although the European Central Bank (ECB), the central bank for the euro, has said that it sees inflationary pressures as transitory.
“The key challenge is to ensure that we do not overreact to transitory supply shocks that have no bearing on the medium term,” ECB President Christine Lagarde said at a forum earlier this week. According to the ECB chief, “What we are seeing now is mostly a phase of temporary inflation linked to reopening.”
Meanwhile, Europe’s natural gas and power prices surged again to fresh record highs on Thursday amid concerns about low supply and forecasts of lower than normal temperatures in the UK.
Europe is low not only on natural gas supply as the heating season begins on October 1. Coal is also in short supply as some utilities are forced to switch to coal from gas due to the surging gas prices. Coal prices are also surging amid a tight global market supply with Chinese demand booming and with high EU carbon prices.
As a result, power prices in Europe are also soaring, with French and German electricity prices for next year hitting records on Thursday.
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.