In brief

• Inflation in the euro area in October reached 4%, its highest level in three years, despite an economic slowdown.
• Industrial activity improved, but raw material and energy costs rose sharply.
• The three largest economies in the region are losing momentum, and Spain is faring better than them.

Inflation rises despite the slowdown

This increase came at a time when the region's GDP is falling. The curves of the two indicators are moving in opposite directions, which is a rare phenomenon and complicates decisions by the European Central Bank (La inflación acelera en la zona euro con la economía en frenada – Expansión).

Industry holds up, but pays for energy

The European industrial sector is proving more resilient than expected. Manufacturing activity improved in October both in Spain and across the euro area (La industria europea planta cara a la crisis pero acusa la presión inflacionaria – Expansión). At the same time, production costs are rising quickly. Prices of raw materials and industrial intermediate goods in the region accelerated sharply in October. Producers point primarily to high energy prices, which they say threaten further growth.

The three largest economies in retreat

The three largest economies of the euro area are the most cooled, and they are simultaneously losing momentum. Spain is faring better than them and still maintains growth, although the environment is becoming increasingly difficult.

What this means for businesses

For Polish entrepreneurs exporting to Europe, this means a combination of weaker demand and rising entry costs. Where a company buys energy and raw materials on the EU market, price pressure translates directly into margins. The direction of this change depends on how long the current level of energy prices persists.