Inflation in the eurozone soars to a record high of 10.7%

The crisis in the eurozone deepened as inflation reached a record high and the economy slowed sharply.

Official figures showed inflation rose rapidly to 10.7 percent last month — much worse than expected and up 9.9 percent in September.

In another blow, separate figures showed the eurozone economy grew just 0.2 percent in the third quarter, after growing 0.8 percent in the previous three months.

The double blow underlined the magnitude of the task facing the European Central Bank (ECB) as it raises interest rates to bring inflation back under control without sending the economy into recession.

Inflation was double digits in 11 of the 19 countries of the single currency zone, according to data from the official Eurostat statistics office.

Energy prices were the largest factor in the overall increase, rising 41.9 percent as Vladimir Putin continues to choke gas supplies to Western Europe.

The price squeeze is holding back economic growth and experts fear that the economy will contract in the coming months and end up in recession.

But with GDP still close to ticking, some think there is room to unleash further sharp rate hikes as the ECB focuses on curbing inflation.

Last week, the ECB raised interest rates by 0.75 percentage point to the highest level since 2009.

It has raised interest rates by a total of two percentage points over the past three months and has indicated further hikes could come as early as December.

Andrew Kenningham, Europe’s chief economist at Capital Economics, said: “The eurozone GDP increase in the third quarter does not change our view that the eurozone is on the brink of recession. But now that inflation has risen well above 10 percent, the ECB will prioritize price stability and continue to hike interest rates no matter what.’

Commerzbank senior economist Christoph Weil said: ‘The ECB’s goal of cutting inflation to just below 2 percent on a sustainable basis still seems a long way off.’

The ECB is battling the biggest price spiral since the record start in the eurozone in 1997.

Yesterday’s data showed that not only rising gas and electricity prices were driving rampant inflation, with food, alcohol and tobacco rising 13.1 percent.

Even excluding those volatile factors, a “core” measure of inflation has continued to rise, reaching 5 percent.

In Germany consumer price inflation was 11.6 percent, in France 7.1 percent and in Italy 12.8 percent. Price increases are a concern worldwide, but more pronounced in Europe.