Inflation rose to an all-time high in Europe in November as a continued upward rise in energy costs pushed prices higher, it emerged on Tuesday.
Annual inflation in the eurozone rose to 4.9 percent, the European statistics agency Eurostat reported, the highest since records began in 1997. Excluding volatile energy and food prices, inflation rose 2.6 percent from a year earlier, the highest in two decades.
Prices for goods and services have risen steadily since the summer as a reopening of the global economy amid the coronavirus lockdowns sapped economic activity, pushed up energy costs and contracted global supply chains.
Energy costs rose 27.4 percent in November from a year ago, continuing the upward trend.
“We haven’t seen inflation this high since the 1980s,” said Bert Colijn, senior economist for the eurozone at ING Bank, in a letter to customers. “The 2021 energy shock is starting to have a substantial impact on consumers,” he added.
Rising inflation has pushed up costs for a range of products and services and has led workers and unions in many European countries to demand higher wages.
Germany, Europe’s largest economy, reported inflation has increased to 6 percent from a year ago, while in France it rose to 3.4 percent, the highest in more than a decade. The highest percentages were in Belgium, where inflation rose to 7.1 percent, and in Lithuania, where inflation reached 9 percent.
With the rapid spread of the recently discovered Omicron variant of the coronavirus, the global economic outlook has suddenly become more uncertain.
The European Central Bank has said it expects the inflation spike to be temporary as energy price increases ease next year. The bank’s mandate is to keep inflation below the 2 percent target.
“While the ECB has stated that it sees current price pressures easing in 2022 and our premise is that monetary policy will remain accommodative, the latest data will contribute to the debate on the appropriate level of policy support,” said Katharina Koenz, economist. at Oxford Economics, said in a note to customers.
“However,” she added, “the ECB can’t do much about higher energy prices and short-term supply problems.”