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Eurozone inflation hits record 8.6% in June

Eurozone price growth hit a new all-time high of 8.6 percent in June, fueling tensions between rate setters at the European Central Bank over the speed of planned rate hikes.

Eurozone inflation rose from 8.1 percent in May, after a sharp acceleration in food and energy prices in many countries offset the slowdown in German inflation caused by government subsidies on transport and electricity.

Eurozone energy prices rose nearly 42 percent in June as Russia cut natural gas supplies to Europe, while food, alcohol and tobacco prices rose 8.9 percent.

Core inflation, excluding more volatile energy and food prices, slowed slightly from 3.8 percent in May to 3.7 percent in June, according to data released by Eurostat on Friday.

Prices of services slowed to 3.4 percent, while prices for non-energy industrial goods continued to rise to 4.3 percent.

ECB President Christine Lagarde this week stuck to the central bank’s plan to start raising interest rates by a quarter of a percentage point on July 21. A bigger step is expected in September unless the inflation outlook improves quickly.

Some aggressive rate-setters on the ECB’s Governing Council plan to push for a bigger 50 basis point rate hike in July amid concerns about how price pressures continue to mount.

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