Euro markets are extending losses after Eurostat’s August inflation data showed a further jump in prices to a record high, paving the way for more aggressive action from the European Central Bank at its next meeting in September.
Annual inflation hit a new record high of 9.1% from 8.9% in July, according to preliminary data released today by Eurostat, beating analysts’ average estimate of 9%.
The data is expected to reinforce concern within the European Central Bank about inflationary expectations. Analysts are no longer ruling out an unusually large interest rate hike of 75 basis points at the ECB’s next meeting on September 8 as part of its bid to rein in prices.
Today’s data follows aggressive rhetoric from central bankers in Europe and the US recently about the need to fight the inflation rally, despite the risks to growth from successive interest rate hikes. The global tightening of monetary policy, with central banks making their biggest interest rate hikes in several decades, has fueled serious concerns about the outlook for global growth, sending shockwaves through global stock markets.
On the board, the pan-European STOXX 600, although it started trading on a rising ground, is currently losing 0.9% to 416.18 points, remaining on a downward trajectory for the fourth consecutive session.
Germany’s DAX lost 1 percent to 12,833.06, while France’s CAC 40 lost 1.1 percent to 6,138.93 after data showed inflation slowed in August.
In particular, harmonized inflation according to initial data announced by the French statistics agency reached 6.5% in August, slowing from 6.8% in July and lower than analysts’ estimate of 6.7% in a Reuters poll.
In a separate statement, the statistics office confirmed an initial reading that saw France’s GDP grow by 0.5% in the second quarter.
Britain’s FTSE 100 fell 1.1% to 7,280.76 points.
Regionally, Italy’s FTSE MIB lost 1%, while Spain’s IBEX 35 fell 1.2%.
Meanwhile, energy insecurity is on the rise in Europe as Russia’s Gazprom today halted natural gas flows through Nord Stream 1 to carry out maintenance work on the pipeline. The outage is expected to last three days, but senior European officials have publicly expressed concern that flows may not be restored.
Source: Capital
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