Euro zone inflation surged past expectations yet again this month to hit a record high, pointing to further interest rate hikes from the European Central Bank as price pressures appear to be broadening.
Consumer price growth in the 19 countries sharing the euro accelerated to 10.7% in October from 9.9% a month earlier, beating expectations in a Reuters poll for 10.2% as inflation in Germany, Italy and France all rose more than forecast, data from Eurostat, showed on Monday.
The ECB has raised rates a combined 200 basis points in the past three months and promised further tightening as soon as December. But markets have started to anticipate a slowdown in rate hikes as a recession looms and gas prices have come down from record highs.
Markets priced out some rate hikes last week after ECB chief Christine Lagarde provided a sombre outlook for economic growth but a string of grim price data since then turned investor sentiment around at least partially. Part of the change is that economists now expect the bloc to be in recession through the end of the first quarter of 2023 and such a downturn is likely to be naturally deflationary, making the ECB's job easier.Gas prices, though still high, are also well down from their late-summer peaks, raising hopes that Europe may find it easier to wean its economy off Russian gas than many had feared.
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