Euro area annual inflation is expected to be 10.7% in October 2022, up from 9.9% in September according to a flash estimate from Eurostat, the statistical office of the European Union.

Looking at the main components of euro area inflation, energy is expected to have the highest annual rate in October (41.9%, compared with 40.7% in September), followed by food, alcohol & tobacco (13.1%, compared with 11.8% in September), non-energy industrial goods (6.0%, compared with 5.5% in September) and services (4.4%, compared with 4.3% in September).

Overall there is still clear evidence that the second round effects of the supply-side shocks to the economy keep pushing up inflation despite moderating demand.

GDP growth of 0.2% is better than expected

In the third quarter of 2022, seasonally adjusted GDP increased by 0.2% in both the euro area and the EU, compared with the previous quarter.

The economy continued to expand in the third quarter. In Germany, it looks like this was mainly due to the last legs of the consumer rebound, while in France consumption growth had already stalled.

Investment was the positive surprise in France. Spain experienced fast slowing growth but the tourism recovery prevented the economy from going into the red in the third quarter.

Among the Member States for which data are available for the third quarter of 2022, Sweden (+0.7%) recorded the highest increase compared to the previous quarter, followed by Italy (+0.5%), Portugal and Lithuania (both +0.4%).

Declines were recorded in Latvia (-1.7%) as well as in Austria and Belgium (both -0.1%). The year-onyear growth rates were positive for all countries except for Latvia (-0.4%).