- Cost of living rising at the fastest rate in single currency zone.
- Rising energy and food prices pushed inflation to 8.1% in the year leading up to May.
- Analysts warn of recession risk for 19-nation bloc.
The level of consumer confidence in the eurozone has reached its lowest point since the beginning of the coronavirus pandemic, as consumers face surging energy and food prices and analysts warn of a rising chance of a recession.
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This month, the European Commission reported that its flash consumer confidence indicator for the eurozone fell 2.4 points to -23.6. This is the lowest measurement since a record low of -24.5 was recorded in April 2020, when the Covid-19 crisis began.
News Agency polled economists, who estimated that consumer confidence in the 19-nation bloc would increase to -20.5, and the findings were worse than forecast.
The cost of living is rising at the quickest rate in the history of the single currency zone as a result of soaring energy and food prices, which pushed inflation to 8.1% in the year leading up to May. As wages lag behind inflation, the majority of European households are worse off.
Economists anticipate that the combined effects of higher inflation and increasing financing costs — as a result of central bank rate hikes — will dampen growth in the eurozone.
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“The odds are that the eurozone will suffer a recession — at least two quarters of negative growth,” said Erik Nielsen, chief economic adviser to UniCredit.
“In early 2023, when the full force of the monetary tightening hits and if excess savings have been reduced, we could certainly dip below early-2022 levels” of eurozone gross domestic product, he added.
