West News Wire: Another eye-watering record was set for inflation in euro-using nations, which was pushed up by a sharp rise in energy prices caused in part by Russia’s conflict in Ukraine.

According to the most recent figures released Friday by the European Union statistics agency, Eurostat, annual inflation in the 19 nations that make up the eurozone reached 8.6 percent in June, exceeding the 8.1 percent recorded in May. Since the Euro was introduced in 1997, inflation has never been higher.

Prices for food, alcohol, and tobacco rose 8.9 percent, while energy prices soared 41.9 percent, both faster increases than those seen the previous month.

Energy demand has increased as the world economy recovered from the COVID-19 pandemic’s worst effects and as Russia’s invasion of Ukraine made matters worse.

European Union leaders agreed to ban most Russian oil imports by the year’s end, driving a price spike. The 27-nation bloc wants to punish Moscow and reduce its reliance on Russian energy, but it’s also adding to financial pain for people and businesses as utility bills and prices at the pump soar.

Russia also reduced deliveries of natural gas used to power industry and generate electricity last month to several EU countries like Germany, Italy and Austria, on top of cutting off gas to France, Poland, Bulgaria and others.

“Importantly, the oil embargo and gas supply squeeze that unfolded over the month of June have caused energy prices to soar,” ING Bank’s senior eurozone economist, Bert Colijn, wrote in a commentary.

Rising consumer prices are a problem worldwide, with the U.S. and Britain seeing inflation hit 40-year highs of 8.6% and 9.1%, respectively. That has led the U.S. Federal Reserve, Bank of England and other central banks worldwide to approve a series of interest rate hikes to combat inflation.

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Colijn said the eurozone’s latest “ugly inflation reading” adds pressure on the European Central Bank to act quickly.

The ECB is planning its first interest rate hike in 11 years this month, followed by another increase in September. Bank President Christine Lagarde said this week that she wants to move gradually to tackle soaring consumer prices, to avoid stifling the economic recovery, but is leaving the door open for bigger rate hikes in case inflation surges more than expected.

Poland, which does not use the euro but is an EU member, reported Friday that inflation rose to 15.6% in June compared with a year earlier, the highest rate in a quarter-century. That was an increase from the annual rate of 13.9% in May.

Analysts noted that the biggest rise in Poland was in gasoline and diesel prices, which went up 46.7% from a year ago. Food prices were up 14.1%.


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