Record EU Inflation Expected; Economy Continues To Grow

 

By VOA

The European Union’s statistical office, Eurostat, on Friday estimated inflation is expected to reach a record 8.9 percent in July, while the Eurozone and EU economy overall continued to grow during the first quarter of 2022.

In its report, Eurostat indicated inflation in July was driven largely by the energy sector with 39.7 percent growth, down from 42 percent in June.

The food, alcohol and tobacco sector follows, with a rise of 9.8 percent, compared with 8.9 percent in June.

The non-energy industrial goods sector grew 4.5 percent compared with 4.3 percent in June, and the services sectorgrew 3.7 percent, compared with 3.4 percent in June.

For months, inflation has been running at its highest levels since 1997, when record-keeping for the euro began, leading the European Central Bank to raise interest rates last week for the first time in 11 years and signal another boost in September.

Meanwhile, Eurostat also reported Friday the eurozone’s seasonally adjusted GDP increased by 0.7 percent and by 0.6 percent in the EU overall, compared with the previous quarter.

In the first quarter of 2022, GDP had grown by 0.5 percent in the euro area and 0.6 percent throughout the EU.

The positive numbers come despite stagnant growth in Germany, Europe’s largest economy.

France showed modest 0.5 percent growth, while Italy and Spain exceeded expectations with 1 and 1.1 percent economic expansions, respectively.

Eurostat says the numbers for both GDP growth and inflation are preliminary flash estimates based on data that are incomplete and subject to further revision.

The Associated Press, citing regional economic analysts, reports a rebound in tourism following the COVID-19 pandemic helped drive economic growth.

The analysts caution, however, that inflation, rising interest rates and the worsening energy crisis are expected to push the region into recession later this year.