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Inflation jumps to record 8.6% in eurozone

A European flag flaps in Athens Greece on June 20, 2012. The eurozone saw inflation increase to an annual rate of 8.6% in June, according to Eurostat. File Photo by Hugo Philpott/UPI | <a href="/News_Photos/lp/2b167ae5e11570a1a9e9383a55a28e9c/" target="_blank">License Photo</a>
A European flag flaps in Athens Greece on June 20, 2012. The eurozone saw inflation increase to an annual rate of 8.6% in June, according to Eurostat. File Photo by Hugo Philpott/UPI | License Photo

July 1 (UPI) -- Inflation in the eurozone, which includes 19 countries that use the euro, reached an annual rate of 8.6% in June, an increase from 8.1% in May, according to the latest European economic statistics released Friday.

Eurostat, the economic statistical arm of the European Union, said energy costs continued to have the biggest effect on inflation, ballooning to 41.9% in June, compared with 39.1% in May. Other increases were found in food, alcohol and tobacco (8.9% compared with 7.5% in May) and industrial goods (4.3% compared with 4.2% in May).

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The European Central Bank is poised to increase interest rates in late July when they meet. The bank could also boost rates again in September if it doesn't have an effect on inflation. The central banks have operated with negative rates since 2014.

Nine of the 19 countries in the eurozone have now reached double-digit annual inflation, Eurostat reported. The overall rate was the latest record high since the euro started circulating in 1999.

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Another change for many of the countries will be sanctions on Russia and its ongoing war in Ukraine. Many depend on Russian fossil fuels to heat homes and power their economies.

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Moscow has already reduced the flow of energy, especially natural gas, to many European countries because of their support of Ukraine, leaving the eurozone searching for alternatives.

The eurozone includes the countries of Belgium, Germany, Estonia, Ireland, Greece, Spain, France, Italy, Cyprus, Latvia, Lithuania, Luxembourg, Malta, the Netherlands, Austria, Portugal, Slovenia, Slovakia and Finland.

RELATED U.S. inflation was up 6.3% in May, driven by a 35.8% jump in energy prices

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