Luxembourgh Times

Euro-zone grows despite inflation hitting record

Annual inflation averaged 10.7% in October for countries sharing the currency, EU statistics agency said

Annual inflation stood at 10.7% in October

Annual inflation stood at 10.7% in October © Photo credit: AFP

The euro-zone's economies managed to grow in the third quarter despite inflation hitting double digits in October, the EU's Luxembourg-based statistics agency said on Monday.

Countries which use the euro, which includes Luxembourg, saw 0.2% economic growth between July and September, Eurostat data showed. The agency did not publish Luxembourg-specific growth figures on Monday.

The growth came as annual inflation in the euro area reached a record 10.7% in October, up from 9.9% the previous month, Eurostat said. In Luxembourg, inflation was 8.8% in October, unchanged from September, Eurostat said.

Rising costs continue to be fuelled by soaring energy prices, which rose by more than 40% compared to a year ago in the 19 countries that share the euro. Food and alcohol prices were also up by 13% in October from last year, Eurostat said.

On Thursday, the European Central Bank delivered a second straight three-quarter-point hike to rein in inflation, raising its deposit rate to 1.5% after it was below zero as recently as July.

While inflation holds steady in the Grand Duchy, the country still may be heading for a recession, according to national statistics agency Statec. The Grand Duchy's economic output dropped by 0.5% in the second quarter, with the industry and construction sectors dragging it down, Statec said in a report released last week.

Growth for 2022 will now come in at just 1.7%, according to Statec. That's down from the 2.5% forecast Finance Minister Yuriko Backes gave in her presentation of the budget earlier this month.