Inflation in the eurozone is predicted to jump to "historical highs" of 7.6% due to Russia's invasion of Ukraine, the European Commission said in a new forecast published on Thursday.

The record-high figure, representing the expected average inflation rate for the year, is an increase from last month's prediction of 6.1%.

"Russia's war against Ukraine continues to cast a long shadow over Europe and our economy," said EU Vice President Valdis Dombrovskis.

The war has caused food and energy prices to surge in Europe as countries scramble to deal with sanctions and disruptions to key infrastructure.

"Risks to the forecast for economic activity and inflation are heavily dependent on the evolution of the war and in particular its implications for gas supply to Europe,'' the EU said in a statement.

Growth set to slow

The EU also slashed growth forecasts for the eurozone, once again citing the consequences of Russia's invasion of Ukraine.

The EU executive now predicts 2.6% GDP growth in the eurozone this year, slightly down from May's forecast of 2.7%.

However, going into 2023, the Brussels now forecasts growth of just 1.4% — down from the previous estimate of 2.3%.

"The evolution of the war and the reliability of gas supplies are unknown, so this forecast is subject to a high degree of uncertainty and downside risks," EU economy commissioner Paolo Gentiloni said at a press conference on Thursday.

No recession expected

Although growth is forecasted to slow, particularly next year, it is not expected to enter negative territory. This means a recession is on the cards.

And although the euro is now at parity with the US dollar, it is nevertheless performing strongly against other major currencies like the British pound and Japanese yen, officials noted.

Additionally, private consumption is expected to remain resilient to increasing prices if households draw upon their savings in the short-term.

"A storm is possible, but we are not there at the moment," Gentiloni added.

zc/sms (AP, Reuters, AFP, dpa)