USA: Deterioration of growth/inflation mix but no stagflation. Eurozone: France and Italy grow strongly while Germany suffers from industrial supply bottlenecks. Inflation: Energy as the main driver in Europe, rising wage pressure especially in the US and UK.
Chart of the month
The energy price shock is affecting the eurozone to varying degrees, with headline inflation in October ranging from 1.4% in Malta to 8.2% in Lithuania and half the countries reporting rates between 3% and 5%. Core inflation, which excludes energy and food, also increased, but has only exceeded the 2% mark in a few countries that have so far published October data. With 2.8% core inflation, Germany is the most prominent example, triggering media attacks on the European central bank. However, interest rate hikes would be of little use against higher energy prices, and core inflation in Germany will fall again from January when certain base effects no longer apply.