Inflation in the eurozone soared to a new record high for the ninth consecutive month, as Europe’s cost of living crisis deepens.

Inflation in the currency bloc hit 9.1 per cent year-on-year in August, according to flash figures released by Eurostat, amid skyrocketing energy prices. The rate was above economists’ expectations of nine per cent. Headline inflation hit 8.9 per cent year-on-year in July.

The closely-monitored measure of core inflation, which excludes more volatile items like food and energy prices and gives a clearer idea of underlying price pressures, rose in August by 4.3 per cent year-on-year, up from four per cent in July.

Several European Central Bank officials warned that high inflation will become more entrenched as more consumers and businesses expect it to remain elevated.

In the meantime, US consumer confidence exceeded expectations in August, reaching the highest level since May, indicating that US consumers were more optimistic about the economy amid falling fuel prices.

A report published by the Conference Board on Tuesday showed that its Consumer Confidence index increased to 103.2 in August from a lower revision of the July reading to 95.3, the first increase in four months. Economists had expected the consumer confidence index to rise to 97.4 from the 95.7 originally reported for July.

“The Present Situation Index recorded a gain for the first time since March,” said Lynn Franco, senior director of Economic Indicators at The Conference Board. “The Expectations Index likewise improved from July’s nine-year low, but remains below a reading of 80, suggesting recession risks continue. Concerns about inflation continued their retreat but remained elevated.”

Finally, China’s manufacturing activity shrank for the first time in three months in August as a consequence of weakening demand, while power shortages and fresh COVID-19 resurgence disrupted production, a private sector survey showed on Thursday.

The latest data from Caixin showed on Thursday that its manufacturing Purchasing Managers Index came in at 49.5, down from 50.4 in July, and below the 50 mark that separates expansion from contraction.

“Lower prices for some raw materials, notably metals and chemicals, led to the first fall in input costs since May 2020, which led firms to cut their output charges for the fourth month in a row,” Caixin said.

This report was compiled by Bank of Valletta for general information purposes only.

Independent journalism costs money. Support Times of Malta for the price of a coffee.

Support Us