As prices rise, the eurozone is in recession

Stock photo of a man using an industrial robot

According to updated statistics, the winter recession in the eurozone was caused by consumers being hit by rising prices.

After also contracting in the final three months of 2022, the economy of the 20-nation bloc shrank by 0 percentage points between January and March.

A recession is generally thought to occur when the economy contracts for two consecutive quarters of three months.

The eurozone has been impacted, like other areas, by rising food and energy prices that have weighed on households.

In the first three months of 2023 and the previous quarter, household spending in the bloc decreased by -0.3% and 1%, respectively.

Early growth projections indicated that the eurozone avoided a recession and grew by 0 percentage points in the first three months of the year. However, more recent data from Eurostat showed that it had contracted in the first quarter.

Revisions to German data, the largest economy in Europe, helped the continent enter a recession.

Germany declared a recession at the beginning of the year last month after its economy shrank by 0.3 percent between January and March.

Given that interest rates are still rising and "inflationary pressures are still present," Oxford Economics economist Riccardo Fabiani predicted only "soft growth" in the eurozone over the upcoming months.

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