Inflation in the European countries using the euro currency shot up to another record in July, pushed by higher energy prices fueled by Russia’s military operation in Ukraine, but the economy still managed better-than-expected, if meager, growth in the second quarter.
Annual inflation in the eurozone’s 19 countries rose to 8.9 percent in July, an increase from 8.6 percent in June, according to numbers published Friday by the European Union statistics agency.
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.
Energy prices surged in July by 39.7 percent only slightly lower than the previous month due to gas supply concerns. Prices for food, alcohol and tobacco rose by 9.8 percent, faster than the increase posted last month due to higher transport costs, shortages and uncertainty around Ukrainian supply.
“Another ugly inflation reading for July,” said Bert Colijn, senior eurozone economist for ING bank, adding that there was “no imminent sign of relief.”
The eurozone’s economy, meanwhile, grew from April through June, expanding by 0.7 percent compared with the previous quarter, despite stagnation in Germany, Europe’s traditional economic engine. France avoided fears of a recession by posting modest 0.5 percent growth, while Italy and Spain exceeded expectations with 1 and 1.1 percent expansions, respectively.