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Euro zone inflation soars to new record as economic growth fades

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Euro zone inflation surged to a fresh all-time high, while the bloc’s economy lost momentum, reinforcing fears that a recession is now all but unavoidable, according to Bloomberg.

Annual inflation reached 10.7% in October, the European Union’s statistics agency, Eurostat, said on Monday. That is up from 9.9% in September and the highest since statistics began to be compiled for the eurozone in 1997, AP News reports.

Third-quarter output, meanwhile, slowed to 0.2% from the previous three months – more than analysts estimated but much less than the 0.8% advance recorded between April and June. With the energy crisis continuing to ravage businesses and households, the expansion is widely expected to shift into reverse during the winter.

A dramatic third-quarter slowdown was already evident in Spain and France as a post-lockdown boom in the tourism and leisure industries faded. Those data came a day after the ECB doubled borrowing costs to the highest level in more than a decade, with officials later backing further big moves to wrest prices back toward their 2% target.

Monday’s inflation figures offered scant encouragement. While the headline number continued to be driven by energy and food costs, an underlying gauge that excludes those two elements also ticked up to a record. Italy on Friday revealed an all-time high that was far more than any economist surveyed by Bloomberg had anticipated.

The outlook remains extraordinarily uncertain. Mild weather and stronger-than-expected supplies of natural gas have led to a significant drop in some wholesale energy costs, but the trajectory of future supply and Russia’s war in Ukraine still pose risks. ECB officials maintain that the priority is to fight inflation.