The inflation rate in the euro zone has reached double digits for the first time since the introduction of the euro.

As the European statistical office Eurostat announced on Friday after an initial estimate, inflation was 10 percent in September.

In August it was still 9.1 percent.

Christian Siedenbiedel

Editor in Business.

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Although many people in Germany were concerned when the euro was introduced that the euro might become less stable than the deutschmark, inflation rates since the start of monetary union had actually been lower on average than they were in the days of the deutschmark.

A year and a half ago, the inflation rate in the euro area was even negative.

With the supply bottlenecks after the corona pandemic and the consequences of the Ukraine war, however, this has changed completely.

Energy and food have become particularly expensive compared to the previous year.

However, prices are now rising across the board.

However, not in all countries to the same extent: In Spain, for example, the inflation rate fell below the 10 percent mark again in September, while in Germany it rose above it.

In this country, among other things, the abolition of the tank discount and 9-euro train ticket was noticeable.

The highest inflation rates in the euro area are in the Baltic countries of Estonia, Latvia and Lithuania.

This has been the case for a long time and is related to the economic structure there.

Inflation in the Netherlands is also unusually high.

In France, on the other hand, inflation rates are relatively low, mainly due to state intervention.

Inflation there even fell from 6.6 to 6.2 percent in September.

Recession concerns had recently led to price declines for various commodities.

For example, the price of oil on the world market fell to less than 90 dollars a barrel (159 liter barrel) for North Sea Brent, which led to some relief in energy prices.

On the other hand, the exchange rate between the dollar and the euro has increased.

This also made imports from the dollar area into the euro area more expensive.

ECB is coming under more and more pressure

The new inflation figures should not leave the European Central Bank (ECB) unimpressed either.

According to its latest forecasts, the central bank remains confident that inflation rates will fall next year.

For the average of the next year, she currently expects 5.5 percent inflation.

However, forecasts with double-digit inflation rates, at least for the first few months of next year, have also been heard from banks.

In their autumn report, the economic research institutes expect inflation in Germany to be 8.8 percent next year.

Exactly how the planned gas price cap will affect the inflation rate is still a matter of debate.

The ECB has already raised interest rates twice, in July and September.

ECB President Christine Lagarde has promised further interest rate hikes for the next interest rate meetings.

She has made it clear that she does not yet consider the current key interest rate to be suitable for allowing inflation to return to the ECB's target of 2 percent.

However, the ECB has little influence on rising energy prices, at most via the exchange rate.

Above all, it can influence inflation expectations in the short term and prevent them from leading to inflation becoming entrenched.

Their conventional influence options need more time and are not likely to take effect until next year.

Struggle for the height of the next rate hike

In a recent discussion with economists Paul Krugman and Larry Summers, ECB Executive Board member Isabel Schnabel expressed concern that the ECB's interest rate hikes would not do much for the high inflation in autumn and winter.

Summers said: Yes, it's like an old hotel - where you turn on the faucet when you shower, but unfortunately the temperature reacts with a delay.

Meanwhile, members of the Governing Council are discussing how much interest rates should be raised at the next ECB meeting on October 27th.

Slovakia's central bank governor Peter Kazimir said he thinks a 75 basis point rate hike is at least a good candidate.

The Austrian Council member Robert Holzmann also spoke out in favor of another significant rate hike.

In his opinion, a rate hike of a full percentage point would be too much at the moment.

ECB chief economist Philip Lane, on the other hand, warned against exaggerating the normalization of monetary policy.

Commerzbank is now expecting an "interest rate peak" from the ECB, i.e. the high point of the key interest rate in the upcoming round of interest rate hikes, at 3 percent, as it announced on Friday.