Inflation reaches 10% in the euro zone

Inflation in Europe’s euro-using nations hits double digits as electricity and natural gas prices soar, signaling a looming winter recession for one of the world’s leading economies as higher costs undermine the consumer power of the population.

Consumer prices in the 19 countries that use the euro rose to a record 10% in September from a year earlier and an annual increase of 9.1% in August, reported the European Union’s statistical agency, Eurostat, the Friday. Barely a year ago inflation was 3.4%.

Price increases are at their highest level since euro records began to be kept in 1997.

Energy prices were the main culprit, up 40.8% from last year. Food, alcohol and tobacco rose 11.8%.

Inflation has been fueled by ongoing cuts in natural gas supplies from Russia and bottlenecks in obtaining supplies of raw materials and parts as the global economy emerges from the COVID-19 pandemic.

Russian cutbacks have pushed up gas prices to the point where energy-intensive businesses like fertilizer and steel say they can’t make a profit on their products.

Meanwhile, soaring utility, food and gas bills are leaving consumers with little money to spend on other things. That’s the main reason why economists are predicting a recession, or a drastic and lasting drop in economic activity, by the end of this year and the beginning of the next.

European officials say the cuts in the gas pipelines of the Russian exporter Gazprom are an energy blackmail with the aim of pressuring and dividing European governments over the West’s sanctions on Russia and its support for Ukraine, including the shipment of weapons.

Higher gas prices translate to higher heating bills and higher electricity costs, since natural gas is used to generate electricity, heat homes and run factories.

Prices in Germany, the largest economy among the 19 nations that use the euro, rose 10.9% to reach double digits for the first time in decades.

Germany plans to invest up to 200 billion euros ($195 billion) to help consumers and businesses deal with higher gas prices.

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