Inflation in the Eurozone hit a new record high in December, as data showed on Friday that the headline inflation rate was at 5% for the month compared to the same time last year.

The month of November had also scored a record high of 4.9%.

Inflation had been increasing in recent months, as money managers were debating if Europe's Central Bank should take a more aggressive stance to combat the rise in prices.

Energy costs hid risen in December, and so had food costs, which contributed to the rise in inflation. These increases are adding to problems for policymakers and the ECB, who had been keeping interest rates at very low levels to stimulate the economy as it recovers from Covid.

The ECB said last month that it would limit its monthly purchase of assets, but added that it will continue providing stimulus in 2022.

Read more: ECB lowers Eurozone 2022 GDP projection, raises inflation forecast

The pandemic and inflation are expected to be the biggest risks for the economy in 2022.

“If inflation were to spring further and persistent upside surprises, central banks might be forced to step on the brakes hard,” analysts at Berenberg said Friday in their global outlook for the new year.

The US federal reserve is making moves ahead of Europe to address rising prices amid inflation by raising interest rates, as consumer prices spiked 6.8% compared to the past year in November, marking the highest inflation rate in 39 years.