Inflation in the euro zone has hit a record high for the sixth month in a row, sparking more questions about how the European Central Bank will react.
According to preliminary estimates by Europe's statistics office, headline inflation in the 19-member region reached 7.5% in April. The figure came in at 7.4% in March.
The euro zone is close to reaching peak inflation, the vice president of the European Central Bank said on Thursday. Energy costs are expected to keep inflation high, but the central bank thinks price pressures will diminish in the second half of the year.
Concerns over the war in Ukraine and the impact on Europe's energy supply are some of the factors that have led to the latest inflation reading.
Energy prices contributed the most to the inflation rate in April, though they were slightly lower than the previous month. In April, energy prices were up 38% on an annual basis, compared to a 44.4% rise in March.
Russia's energy firm, Gazprom, halted gas flows to two EU nations for not paying for the commodity in rubles. Other countries may be cut off as well.
The economic effects of a cut in supplies to Germany would be catastrophic, according to analysts at Gavekal.
Italy's central bank predicts a recession this year if Russia cuts its energy supplies.
The EU gets 40% of its gas imports from Russia. Companies that depend on the commodity to produce their goods could be hit hard by reduced flows.
The CEO of OMV, one of Europe's largest energy firms, told CNBC that it would be hard for the EU to find alternatives to Russian gas in the short term.
It will be very difficult for Europe to substitute the Russian gas flows. In the short run, I think we need to stay focused and make sure that we keep European industry, European households supplied with gas.
The GDP rate for the euro area in the first quarter was 0.2.
Portugal recorded the highest increase of 2.5% compared to the previous quarter, followed by Austria and Latvia. Declines were recorded in Sweden and Italy.
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