GERMANY - FRANKFURT AM MAIN - LIFESTYLE - ECONOMY - ILLUSTRATION Illustrations of everyday life in Frankfurt am Main. Sculpture of the Euro, in front of the Eurotower, former headquarters of the ECB until 2014. July 22th 2019. Frankfurt am Main, Germany. FRANKFURT AM MAIN HESSE GERMANY PUBLICATIONxINxGERxSUIxAUTxONLY Copyright: xElkoxHirschx HLELKOH852731

The surge in energy prices as a result of the Ukraine war is driving inflation in the euro area to new record highs. In July, consumer prices climbed by 8.9 percent year-on-year compared to the same month last year, according to an initial estimate from the statistics office Eurostat.

Economists, on the other hand, had expected an unchanged rate of 8.6 percent in June. Inflation was 8.1 percent in May and 7.4 percent in April. The European Central Bank (ECB) is thus still clearly missing its inflation target. The currency watchdogs are targeting two percent inflation as the ideal value for the economy in the 19-country community.

The euro guards around central bank chief Christine Lagarde have already initiated the interest rate turnaround due to the massive surge in inflation. On Thursday a week ago, with their first interest rate hike in eleven years, they took an unexpectedly strong step against the escalating inflation.

The euro guards raised the key interest rate by half a percentage point to 0.50 percent. The interest rate hike was thus twice as high as originally planned. Some currency watchdogs believe further strong hikes are possible. The next interest rate meeting will take place on September 8th in Frankfurt.

According to Eurostat, energy prices shot up 39.7 percent year-on-year in July, after a 42.0 percent increase in June. Unprocessed food prices increased by 11.0 percent, service prices increased by 3.7 percent.

Despite record inflation and the Ukraine war, the economy in the euro zone grew more significantly than expected in the spring. Between April and June, the gross domestic product (GDP) increased by 0.7 percent compared to the previous quarter, as the European statistical office Eurostat announced on Friday.

Economists, on the other hand, had only expected an increase of 0.2 percent for the second quarter. At the beginning of the year, there was only a plus in GDP of 0.5 percent. Compared to the same period of the previous year, economic output rose by 4.0 percent in the spring.