European Union finance ministers from countries using the euro — collectively known as the Eurogroup — said Monday that fighting inflation was their number one priority.

The news came as the European Commission, the EU's executive arm, revised its economic forecast, citing rising inflation, dwindling growth and growing geopolitical and natural disruptions to business as the biggest drags on the economy as a whole.

"What we see is that economic growth is proving quite resilient this year. Still, one can expect some downward revision and even more so for the next year because of many uncertainties and risks," said Valdis Dombrovskis, executive vice-president of the European Commission for an Economy that Works for People, speaking in Brussels.

Moreover, Dombrovskis suggested, "inflation is going to be revised upwards."

Economics Commissioner Paolo Gentiloni offered further warning, saying risk continues to increase in the face of Russian gas supply cuts. "We're heading into rough waters," he said, hinting at "very limited, reduced and slowed economic growth" as a result of the widening energy crisis caused by the Russian invasion of Ukraine.

"What we are seeing is that these continued high energy prices are trickling down to the rest of the economy and inflation is getting more entrenched and more widespread," warned Dombrovskis.

Gentiloni said Brussels has numerous options when it comes to fighting inflation, including gas imports and price caps.

Other financial institutions, such as the International Monetary Fund (IMF), have also warned of the drag the war in Ukraine will put on Eurozone economies.

EU economic forecast looking gloomier as inflation spikes

The European Commission had originally predicted 4.0% economic growth on the year, it is expected to peg that number at 2.7% when it unveils this year's forecast on Thursday. Next year's forecast looks gloomier still — originally pegged at 2.7%, it is now being revised down to 2.3%.

Annual inflation, which had been estimated to hit 3.5%, instead climbed to 6.1%, and monthly inflation for June hit a whopping 8.6%.

The focus on inflation clearly indicates a move away from the massive stimulus programs that defined the height of the coronavirus pandemic. Despite concerns of sparking economic contraction, the European Central Bank (ECB), for instance, is expected to raise interest rates for the first time in 11 years on July 21.

The report's Thursday release also comes as EU governments begin budget negotiations for the fiscal year 2023. Belgian Finance Minister Vincent Van Peteghem said that should translate into fiscal prudence, including budget cuts and structural reform.

js/fb (AFP, Reuters)