Eurozone inflation tops 10% for second straight month

The euro-area inflation surged to a fresh record, surpassing expectations and bolstering calls for the kind of aggressive interest-rate increases being deployed by central banks across the world.

Consumer prices increased by 8.6% from a year ago in June, up from 8.1% in May. Economists surveyed by Bloomberg saw a gain of 8.5%. The median estimate for the poll has fallen short for 11 of the last 12 months.

The data shows an escalating squeeze on households and firms across the 19-member currency bloc, where France, Italy and Spain reported new all-time highs this week. The 1 economy saw a slowdown thanks to fuel-tax cuts and public transportation discounts that are temporary. Price growth has shot past 20% in the Baltic region.

Governments have been weighed in with billions of euros in support but their ability to help is limited after spending huge sums during the epidemic. Retailers like Hennes Mauritz AB and Zalando SE are suffering because of the soaring cost of living. Volkswagen AG's sales have fallen for months.

The European Central Bank has faced criticism for letting inflation zoom beyond its 2% target, as peers like the Federal Reserve hikes that have reached 75 basis points, despite the fact that it is on the brink of a first rate increase in more than a decade.

The ECB blames Europe for the post-lockdown spike in energy costs that snowballed when Russia attacked Ukraine. In June, the underlying inflation, excluding energy and food, was down to 3.7%, despite the relentless advance in prices.

German two-year yields, which are most sensitive to changes in interest rates, went up four basis points to 0.69% while money markets wagered on 151 basis points of hikes by the end of the year, compared to 146 on Thursday.

With signs that future prices are going higher, the ECB plans to raise its deposit rate by a quarter-point in July. Despite his Governing Council colleagues from Latvia and Lithuania urging tougher action to be an option, the Belgian central bank chief Pierre Wunsch called the move a done deal.

The following ECB meeting is in September, with Friday s data all but locking in the half-point rate hike that has been lined up for then if the inflation backdrop doesn't improve. That would bring the deposit rate back above zero for the first time in eight years.

It is unlikely that the ECB will revise its next inflation outlook. The Governing Council gave new guidance in June, which raises the probability that the central bank will increase rates by 50 basis points in September. The ECB plans a long cycle of increases, though economic headwinds are strenthening. Manufacturers are reporting a steep decline in demand, a survey by S&P Global shows on Friday, while mounting fears of winter power outages if Russia limits natural gas supplies are raising the prospect of a recession.

Policy makers are trying to make measures to protect against potential panic in the euro-region states as borrowing costs rise, in order to make sure their inflation-fighting efforts can be effective.

No ADT Is Betting Google Can Drag It Into the Future?