OPINION
Market Rating Before FOMC MeetingJan 31
Inflation Breaks Record Once Again in Eurozone
According to the preliminary reading data announced by the European Statistical Office (Eurostat) today, the consumer price index (CPI) in the eurozone increased by 1.5% in October compared to the previous month, and broke a record with 10.7%, above the market expectations of 10.2% on an annual basis. During this period, the core CPI rose by 0.6% on a monthly basis and 5.0% on an annual basis.
According to Eurostat, on a monthly basis in the eurozone, energy products increased by 6.5%, followed by food, alcohol, and tobacco products at 1.5% and non-energy industrial products at 1.2%. On an annual basis, the biggest contribution to inflation came from energy with 41.9%. Food, alcohol, and tobacco products increased by 13.1%, followed by non-energy industrial goods at 6.0% and services at 4.4%.
The countries that experienced the highest increase in consumer inflation in the eurozone were Estonia at 22.4%, Lithuania at 22.0% and Latvia at 21.8%, respectively. The lowest increase was in Malta at 7.5%, Spain at 7.3%, and France at 7.1%.
It is seen that the main driver of regional inflation continues to be energy. Moreover, here, it is also possible to say that the fluctuations in commodity prices due to the Russia-Ukraine war also triggered food inflation. As a matter of fact, the annual change in energy and food, alcohol, and tobacco products clearly appears in the report.
It may be possible to say that the European Central Bank (ECB) will continue its aggressiveness in the tightening path after the peak inflation rates have been updated in the region. As a matter of fact, in the last week's monetary policy meeting on October 26-27, the ECB increased interest rates by 75 basis points for the second time. ECB President Christine Lagarde, on the other hand, pointed out that price pressures are spreading across the board and to the continuation of the bank's rate hikes.
After the release of the data, it is seen that the US dollar maintains its pressure on the euro. The EURUSD parity, which opened the day at 0.9946, dropped to the level of 0.9914 with a decrease of about 0.2%.
On the other hand, the US Federal Reserve's (FED) interest rate hike by 75 basis points on Wednesday is considered almost certain. This may mean that the weight on the EURUSD parity may increase.
According to Eurostat, on a monthly basis in the eurozone, energy products increased by 6.5%, followed by food, alcohol, and tobacco products at 1.5% and non-energy industrial products at 1.2%. On an annual basis, the biggest contribution to inflation came from energy with 41.9%. Food, alcohol, and tobacco products increased by 13.1%, followed by non-energy industrial goods at 6.0% and services at 4.4%.
The countries that experienced the highest increase in consumer inflation in the eurozone were Estonia at 22.4%, Lithuania at 22.0% and Latvia at 21.8%, respectively. The lowest increase was in Malta at 7.5%, Spain at 7.3%, and France at 7.1%.
It is seen that the main driver of regional inflation continues to be energy. Moreover, here, it is also possible to say that the fluctuations in commodity prices due to the Russia-Ukraine war also triggered food inflation. As a matter of fact, the annual change in energy and food, alcohol, and tobacco products clearly appears in the report.
It may be possible to say that the European Central Bank (ECB) will continue its aggressiveness in the tightening path after the peak inflation rates have been updated in the region. As a matter of fact, in the last week's monetary policy meeting on October 26-27, the ECB increased interest rates by 75 basis points for the second time. ECB President Christine Lagarde, on the other hand, pointed out that price pressures are spreading across the board and to the continuation of the bank's rate hikes.
After the release of the data, it is seen that the US dollar maintains its pressure on the euro. The EURUSD parity, which opened the day at 0.9946, dropped to the level of 0.9914 with a decrease of about 0.2%.
On the other hand, the US Federal Reserve's (FED) interest rate hike by 75 basis points on Wednesday is considered almost certain. This may mean that the weight on the EURUSD parity may increase.
