Inflation Hits Record 8.9% in Euro Area, But Economy GrowsLONDON — Inflation in the European countries using the euro currency shot up to another record in July, pushed by higher energy prices fueled by Russia’s war in Ukraine, but the economy still managed better-than-expected, if meager, growth in the second quarter.
Energy prices surged in July by 39.7%, only slightly lower than the previous month due to gas supply concerns. Prices for food, alcohol and tobacco rose by 9.8%, faster than the increase posted last month due to higher transport costs, shortages and uncertainty around Ukrainian supply. Economists pointed to the rebound in tourism following the COVID-19 pandemic, with short-staffed airports and airlines packed this summer, leading to travel chaos.
, raising fears of a recession with inflation at 40-year highs. But the job market is even stronger than before the COVID-19 pandemic, and most economists, including Federal Reserve Chair Jerome Powell, have said they don’t think the economy is in recession.Many, however, increasingly expect an economic downturn in the U.S. to begin later this year or next, much like in Europe.
While European Union governments approved a measure this week to reduce gas use by 15% and have passed tax cuts and subsidies to ease a cost-of-living crisis, Europe is at the mercy of Russia and the weather.
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