Eurozone inflation fell sharply in October but at the cost of a stalling economy verging on the brink of recession, provisional estimates out Tuesday from the EU’s main statistical agency show. File photo by John Angelillo/UPI
Eurozone inflation fell sharply in October but at the cost of a stalling economy verging on the brink of recession, provisional estimates out Tuesday from the European Union’s main statistical agency show.
Annual inflation in the 20 countries that use the euro is expected to come in at 2.9% for the month — down from 4.3% in September and 5.2% in August — almost entirely due to a sharp double-digit fall in energy price inflation, according to Eurostat. Advertisement
At 7.5% food, alcohol and tobacco inflation was estimated to have the highest inflation followed by services, 4.6%, and 3.5% for non-energy industrial goods, but the pace at which prices were rising slowed for all three categories.
However, GDP in the euro area contracted by 0.1% in the July to September quarter, compared with the second quarter when it rose by 0.2%, as high interest rates, a cost of living crisis and anemic global economic growth dragged on the economy.
Germany and France, the main engines of the eurozone economy, look to be on shaky ground with German GDP — already on life support — contracting by 0.1% while French growth slowed sharply to 0.1%, down from 0.6% in the second quarter. Advertisement
However, Ireland saw the largest decline with GDP contracting by 1.8% quarter-on-quarter. Austria and Czechia also saw their economies shrink by 0.6% and 0.3% respectively.
By contrast, Latvia threw off a first-half recession to grow by 0.6% and Belgium’s GDP growth accelerated to 0.5%. Spanish GDP rose 0.3%, but that was down on the 0.4% growth it racked up in the April to June quarter.
However, Eutostat said it expected the economy of the 27 member countries of the EU as a whole to do slightly better, eking out growth of 0.1% in October.
In its summer forecast published in September, the EU revised down its growth estimate for 2023 from 1% to 0.8% blaming weak consumption resulting from high and ongoing price rises for most consumer goods and services.
The forecast sees Eurozone GDP growth slowing even more sharply to 0.8% from 1.1% predicted earlier in 2023. When growth returns in 2024 it will do so less strongly than previously thought with 1.3% the economy of the eurozone expanding by 1.3% and the EU as a whole by 1.4%.
