The European Commission has revised down its economic forecast, warning that stubbornly high prices for goods and services are "taking a heavier toll than expected."
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00:00 The European economy continues to grow but with reduced momentum.
00:05 In its summer forecast, the European Commission revised growth in the Eurozone down to 0.8% in 2023 and 1.3% next year.
00:14 That's 0.3 percentage points lower, respectively, than forecast in the spring outlook.
00:20 Speaking to reporters in Brussels, EU Economy Commissioner Paolo Gentiloni said this sluggish growth trend was likely to continue into next year.
00:29 The weaker growth momentum is set to expand to 24.
00:33 However, a mild rebounding growth is still expected as inflation continues easing and the labour market remains robust.
00:43 Weakness in domestic demand shows that still high consumer prices for most goods and services are taking a heavier toll than expected in the spring.
00:52 This is despite declining energy prices and an exceptionally strong labour market.
00:56 In the Euro area, annual inflation reached 5.3% in July and August, exactly half of the peak level of 10.6% recorded last fall.
01:05 But consumers need patience to fully feel the price decrease in their wallets, analysts say.
01:11 I think when we all go to the supermarket, we actually see prices that are very, very high.
01:17 And therefore we conclude, instinctively almost, that inflation is very high.
01:23 But actually if you look at the numbers, inflation is coming down very fast.
01:27 And that is because energy prices have come down from where they were last year.
01:32 And then we also see that food prices are coming down, but they're coming down very, very slowly.
01:38 Russia's ongoing war against Ukraine and wider geopolitical tensions continue to pose risks and remain a source of uncertainty.
01:46 In addition, concerted efforts by international central banks of monetary tightening to fight inflation could darken further growth prospects.
01:54 In the words of the European Commission, the economic outlook remains challenging.
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