European Diesel Prices Approach $200 a Barrel as Eurozone Industrial Production Contracts 1.1% YoY

European diesel prices are approaching $200 a barrel. Meanwhile, today's Eurostat report shows eurozone industrial production contracted another 1.1% YoY, and Germany's industrial production is almost 10% below 2021 levels.
According to the author, the energy shock is hitting Europe's already struggling industrial base. Higher diesel prices mean higher transportation and production costs and, ultimately, higher inflation. The author argues that companies cannot pass on these costs indefinitely, so margins get crushed, production gets cut and more factories become uncompetitive.
The author says Europe is facing another stagflationary shock. They argue the ECB can fight inflation by crushing demand through rate hikes, but that would further worsen the deindustrialization trend and the sovereign debt crisis.