Eurozone Consumer Price Inflation Hits Lowest in 2 Years... Accompanied by Economic Recession

The consumer price inflation in the Eurozone (20 countries using the euro) in October narrowed significantly, marking the lowest level in two years.

This indicates that the European Central Bank's (ECB) consecutive interest rate hikes to curb inflation have been effective. However, the economy is in recession due to the impact of the high interest rate policy.

According to Eurostat, the EU's statistical agency, on the 31st (local time), consumer prices in October rose by 2.9% (flash estimate) compared to a year earlier. This is a 1.4 percentage point slowdown from 4.3% in September and the lowest level since July 2021.

By sector, energy prices fell by 11.1% in October, contributing to the reduction in inflation. The inflation rate for food, alcohol, and tobacco was 7.5%, 1.3 percentage points lower than 8.8% in September, while inflation rates for services and industrial goods slowed to 4.6% and 3.5%, respectively.

The core inflation rate in October, which shows the underlying trend of prices, also slowed from 4.5% in September to 4.2% in October. This is the smallest increase since July last year.

However, AP News analyzed that the Eurozone's economic growth has effectively 'disappeared' due to the impact of high interest rates. In fact, according to Eurostat statistics released the same day, the Eurozone's economic growth rate for the third quarter (July to September) was -0.1%. In particular, Germany, the largest economy in the Eurozone, saw its GDP decrease by 0.1% compared to the previous quarter in the third quarter.