Reiterating its determination to halt the rise in prices, the European Central Bank last week announced it was raising interest rates by three-quarters of a percentage point for the second time in a row.
Interest rates are expected to be further raised in mid-December, yet consumer prices in Cyprus and the other 18 countries that use the euro as their currency rose at a record annual rate of 10.7 percent in October.
In September, the rate was 9.9 percent and 12 months ago it was 4.1 percent, according to Eurostat.
“It is obvious that raised interest rates are not doing much for the time being,” Philenews reported on Tuesday citing analysts.
“According to the ECB and mainstream economic theory, increasing the price of money through rising interest rates leads to less borrowing and less consumption, thus, reduced inflation. This is not happening right now,” it also said.
Moreover, there are growing concerns that efforts to corral inflation by making borrowing and mortgages more expensive will accelerate countries’ slide into recession, choking off investment and increasing unemployment.
Eurostat also announced on Monday that the annual rise in inflation in the Eurozone was 8.6% in June and 8.9% in July.
Last year, Eurozone’s inflation in October increased by 4.1% compared to October 2020.