Eurozone inflation hits fresh record, while economy grows robustly
FRANKFURT – The eurozone economy expanded more than expected in the second quarter, while inflation in July overshot expectations once again to hit a fresh record high, data released by the EU statistics agency showed Friday.
The data suggest the European Central Bank is more likely to tighten policy more aggressively in the coming months.
The eurozone economy grew by 0.7 percent on the quarter, accelerating from 0.5 percent in the first three months of the year. The strong performance was driven by rapid growth in Spain and Italy.
A Reuters poll of analysts had called for a significant slowdown.
Meanwhile, headline inflation accelerated to 8.9 percent in July, up from 8.6 percent in June. Expectations saw inflation remaining at or just slightly above the June rate.
Looking ahead, recent data still suggest a slowdown in activity and historically high inflation levels ahead.
“We are going to face a combination of slow growth and high inflation,” European Central Bank Vice-President Luis de Guindos said in an interview with the Estonian paper Postimees released earlier Friday.