In Europe, energy prices have risen dramatically, which has put upward pressure on inflation. Franck Fife/Getty Images
Inflation in the Eurozone reached a 13-year peak in September, as energy prices rose and supply chains became clogged up.
This puts pressure on European Central Bank which has previously argued that inflation is temporary.
Inflation reached a record high of 4.1% in Germany, Europe's largest economy, after 29 years.
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Inflation in the Eurozone rose to its highest level for 13 years in September due to sky-high energy prices, supply-chain bottlenecks and a soaring continent.
According to the European Union's statistics office, the eurozone's harmonized consumer price index rose 3.4% in September compared with a year ago. This was compared to a 3% rise in August. The September figure exceeded economists' expectations of 3.3%.
The German inflation, Europe's largest economy, rose to 4.1% in the past 29 years, while French inflation reached 2.7% a decade ago.
To $1.158, the euro was about flat against the dollar. Stoxx 600, the continent-wide index, was 0.7% lower than its previous low in late July.
Globally, major economies are struggling with inflation jumps that put pressure on central banks who unleashed massive amounts of stimulus during coronavirus crisis.
For a long time, central banks insisted that inflation would prove "transitory" but will begin to fall in the year after the economies recover some equilibrium.
They aren't so sure now. Last week, the Bank of England stated that it expected inflation to stay at its highest level in 10 years well into 2022. The US Federal Reserve expressed surprise at the rapid price rises. Both banks have indicated that they may reduce support as a response to these price rises.
Continue reading: A $31B investment firm has a stellar track record of beating market crashes. Here are 4 ways to play the 'new regime' which will result in dramatic re-ratings of many stocks as inflation heats.
Oil reached $80 per barrel this week due to a global energy crisis. Strong demand and COVID outbreaks have also impacted global supply chains, driving up prices for raw materials and other goods.
Friday's numbers put pressure on European Central Bank. It has adopted a more cautious tone than most central banks, and is therefore less pro-stimulus. Although the ECB anticipates that inflation will drop sharply by 2022, economists say strong price rises will raise questions about its forecasts.
Carsten Brzeski (global head of macro at ING) stated that "we would not be surprised to see ECB reduce its asset purchases 2022 to a greater extent than we thought after the August meeting."
Chiara Zangarelli of Nomura fixed income analysts said that the Japanese bank believes inflation will fall to just under 1% by 2022, as energy prices drop. She stated that the ECB could increase asset purchases in December.
