EU blow as inflation in France hits record high amid mounting fears of recession across the West
Inflation in France hit a record high amid mounting fears of recession across the West.
Official figures showed prices in France are now 6.5pc higher than a year earlier.
The figures came a day after Spanish inflation hit a 37-year high of 10.2 per cent but in Germany it eased slightly to 8.2 per cent.
The latest figures pile pressure on the European Central Bank to raise interest rates for the first time in more than a decade when it meets this month.
Record inflation: A local market in Nice, France. Bleak official figures showed prices in France are now 6.5% higher than a year earlier
ECB president Christine Lagarde has signalled rates will rise from minus 0.5 per cent to 0.25 per cent on July 21 and again in September – possibly back into positive territory.
Central banks around the world – including the Bank of England and US Federal Reserve – are raising rates as they step up their battle against runaway inflation.
Sweden’s central bank yesterday raised rates from 0.25 per cent to 0.75 per cent.
But it is feared that aggressive rate hikes to deal with the cost of living crisis will tip economies into recession.
Analysts at Pimco, one of the world’s largest bond traders, said a recession in the US and Europe over the next 12 months was ‘probably more likely than not’.
Pimco global chief investment officer Andrew Balls, brother of former Labour MP Ed Balls, put the probability of recession at just above 50 per cent.
‘You’re clearly going to see a significant growth slowdown,’ he said. ‘The inflation profile in the short term is very important.
‘Central banks are focused on inflation credibility.’