France, Europe, Britain reel as inflation reaches record levels

The Ukraine conflict has sent inflation soaring to the highest level in decades worldwide, sparking economic turmoil and forcing major central banks to ramp up interest rates. British inflation has accelerated to the highest level for 41 years, driven by soaring prices for energy, food and transport.

Under pressure: the Bank of England. AP - Kirsty Wigglesworth

The UK Consumer Prices Index hit 11.1 percent in October, reaching the highest level since 1981, the Office for National Statistics (ONS) said in a statement.

That compared with 10.1 percent in September, the highest in 40 years.

The French Central Bank estimates inflation at around 6 percent.

Cross-channel domestic fuel bills rocketed further despite the UK government's energy price freeze as the market faced fresh fallout from key producer Russia's invasion of Ukraine.

The October figure beat market expectations of 10.7 percent and was higher than the Bank of England's forecast peak.

"Rising gas and electricity prices drove headline inflation to its highest level for over 40 years, despite the Energy Price Guarantee," said ONS chief economist Grant Fitzner.

Over the last year, gas prices have increased by 130 percent and electricity prices by 66 percent, according to the ONS.

Food prices and transport costs also propelled inflation higher.

Runaway inflation comes despite Britain's energy support, which sought to limit annual energy bills at an average of £2,500 per year.

UK Finance Minister Jeremy Hunt, speaking on the eve of the government's budget announcement, blamed Russian President Vladimir Putin's war in Ukraine for spiking prices, as well as fallout from the Covid pandemic.

German confidence increases

German investor confidence saw a surprising rebound in November, a closely watched survey showed Tuesday, on hopes that inflation will start to slow and ease the pain on businesses and households.

The ZEW institute's economic index jumped by 22.5 points to minus 36.7 points, the second consecutive increase after months of falling confidence.

Food prices in Spain posted a record rise in October, keeping the cost of living painfully high even as lower energy costs spurred a drop in inflation, official data indicate.

Overall food prices climbed 15.4 percent from a year earlier, the biggest increase since the records began in January 1994, according to the National Statistics Institute.

The EU has warned that the eurozone is set to fall into recession this winter as Brussels hiked inflation forecasts for 2022 and 2023 on the back of high energy prices.