Eurozone's inflation has reached double digits

The economic crisis in the eurozone has intensified for the first time with double-digit inflation in history, which will force the European Central Bank to continue aggressively raising interest rates.

Consumer prices rose by 10% compared to September last year, data from Eurostat showed. This is more than the average forecast of 9.7% according to a poll of economists by Bloomberg, and also a result that exceeded the consensus for the fifth month in a row.

Energy and food again caused the main increase in inflation, although the underlying figure excluding them also beat estimates, hitting an all-time high of 4.8%.

“Price increases are likely to hover around current levels until early next year. Inflation is then expected to gradually decline as energy pressure eases,” said Maeva Kuzen, senior economist at Bloomberg.

Such data proved to be critical in spurring significant rate hikes in previous months, and this outcome is likely to underpin calls for another significant move with the ECB's next decision on 27 October.

“The next step still needs to be big, because we are still far from 2% inflation rates,” ECB Governing Council member Martins Kazaks said in an interview in Vilnius, Lithuania, where prices rose by 22.5%. "I would support 75 basis points."

While officials have stepped up their aggression, they have also sought to differentiate the eurozone experience from that of the US, insisting that inflation in their own region is driven much more by supply than by demand.

Nevertheless, politicians will be nervous about the next update of records. Boris Vujcic, Croatia's central bank governor, warned in an interview that "when inflation is high and when it approaches double-digit levels, it can become a disease in itself."

Officials on Monday raised their eurozone inflation forecast for next year by 1.6 percentage points to 6.2%, well above the ECB's own forecast. ECB President Christine Lagarde reiterated that officials also see the danger.

“The risks to the inflation outlook are primarily upside, largely reflecting the possibility of further severe disruptions to energy supplies,” she told lawmakers. "We expect further interest rate hikes over the next few meetings to dampen demand and guard against the risk of a continued rise in inflation expectations."