The UK's consumer price index (CPI) rose to 9% in April, up sharply from 7% in March and the fastest rate of growth since 1982, figures released by the Office for National Statistics on May 18 showed.


Across the English Channel in the euro zone, the ECB is also under pressure from high inflation. The euro zone's harmonized CPI rose 7.5 per cent in April from a year earlier, the highest since records began in 1997, according to eurostat.


Due to the extreme quantitative easing in Europe and the United States in the past two years, as well as the russia-Ukraine conflict this year, energy prices in Europe and international wheat prices have risen to record highs, coupled with poor global supply chains, inflation in many European countries has been rising, and European people are also very dissatisfied with high prices.

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Soaring prices in almost every area of life have overtaken the Conflict between Russia and Ukraine and the COVID-19 pandemic as germans' biggest concern, according to a McKinsey poll. The soaring cost of living has forced both high and low earners to cut back on spending. Moreover, EU economists and analysts believe prices will continue to rise this year and next.


Face record inflation and public discontent, the European central bank management committee members, the Dutch central bank governor, said on May 17, July raised interest rates by 25 basis points support, if inflation data continues to worsen, the European central bank may be more aggressive, do not rule out the possibility of higher interest rates 50 basis points. There is a risk that inflation in the eurozone will accelerate further, especially if the EU and Russia are locked in a standoff over energy supplies. Also on May 17, Federal Reserve Chairman Jerome Powell reiterated the need to do whatever it takes to fight inflation.


Europe and the United States central bank to fight inflation comments so consistently, the probability of the market expected the European central bank to raise interest rates in July, and respond to this immediately. European bonds fell and yields shot up on May 18th. The German 2-year yield hit its highest since December 2011 at 0.423% before retreating to 0.394%. On May 17, German 10-year bond yields rose 10 basis points to 1.04%, while Italian 10-year bond yields rose 12BP to 2.96%.


Short term and long term yields rise, means that the overall capital market prices, capital use cost increases, the risk of asset prices have the inhibitory effect of immediate, combined with investor concern about the economic outlook, on May 18, three major European stock markets fell, the London stock market fell 1.07%, the stock market fell 1.20% in Paris, France, In Frankfurt, Germany, the stock market fell 1.26 per cent, with consumer stocks being the first to fall.

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While the European economy has benefited to a large extent from the gradual easing of containment measures, investor sentiment towards capital markets has shifted and consumers are generally more conservative in their spending intentions.


New car registrations in Europe fell 20 per cent year on year to about 830,400 in April, the biggest drop this year, according to data released by the European Automobile Manufacturers' Association (ACEA) on the 18 May. At the same time, in the European car industry supply chain risk, inflation and a record or make consumers away, cause a downturn of the European car sales for 10 months in a row. Automobile consumption is often a leading indicator of economic development in a region. When automobile sales drop sharply, the risk of economic downturn increases significantly.


Real GDP growth in the EU and the euro area will be 2.7% in 2022 and 2.3% in 2023, down from 4.0% and 2.8% respectively in February's outlook, according to the Spring 2022 Economic Outlook released by the European Commission on 16 May. At the same time, the Commission sharply raised its forecast for full-year inflation in 2022 to 6.8% in 2022, up from 2.9% in 2021.