ROME — Record rates of inflation that have hit European Union (EU) member states this year are a symptom of a wider economic paradigm shift, an Italian economist has said.

Inflation in the 19-nation eurozone was 10 percent in November, following a record-high of 10.6 percent the month before, and the highest year-on-year price increases since the creation of the euro currency have all taken place in the last nine months. 

Carlo Altomonte, professor of political economics at Bocconi University in Milan, told Xinhua the record price increases are part of a broad economic shift for European countries.

This shift is even more extreme than that of the 2008-2009 financial crisis, he said. 

High energy prices sparked by the conflict between Russia and Ukraine have been the main driver behind extreme price increases, forcing the European Central Bank (ECB) to raise interest rates in order to curb inflationary pressure.

This makes it more expensive for companies and individuals to borrow money, resulting in slower economic growth and higher unemployment.

Philip Lane, ECB’s chief economist, said this week that while European inflation is probably near its peak, the ECB does “expect that more rate increase will be necessary.” 

According to media reports, the ECB is likely to increase interest rates by 50 basis points at its Dec. 15 meeting, adding to previous increases of 200 basis points since July. 

Lane said the ECB could not rule out inflation remaining high into next year, and that the return to “normal” levels will be slow.

“The journey of inflation from the current very high levels back to 2 percent will take time.”

Altomonte noted that the price increases would likely result in an economic recession, meaning back-to-back quarters of negative economic growth. 

“In Europe, we are used to cheap energy that has helped fuel export-driven economic growth,” said Altomonte.

“Regardless of how the Ukraine crisis plays out, we will no longer have access to that cheap energy and economies will have to adapt.” 

While exports account for 10 to 12 percent of the gross domestic product in the United States, the figure in Europe is far higher, he said. 

“With high energy prices, that level of economic dependence on exports cannot be sustained. 

“Inflation per se will not be the driver of the crisis, but rather a symptom of a much deeper economic shift,” he said. – Xinhua