BRUSSELS, Sept 11 Reuters The euro zone economy will grow slower than previously expected this year and next, the European Commission forecast on Monday as consumer demand suffers from high inflation and the biggest economy, Germany, slips into recession this year.

In its interim forecasts for gross domestic product and inflation of the euro zone39;s five biggest economies, the Commission said the single currency area39;s GDP gross domestic product would expand 0.8 in 2023 and 1.3 in 2024, against forecasts of 1.1 and 1.6 respectively made in May.

Weakness in domestic demand, in particular consumption, shows that high and still increasing consumer prices for most goods and services are taking a heavier toll than expected in the spring forecast, the Commission said.

This is despite declining energy prices and an exceptionally strong labour market, which has seen record low unemployment rates, continued expansion of employment, and rising wages, it said.

The Commission forecast euro zone consumer inflation of 5.6 in 2023 and 2.9 in 2024, both well above the European Central Bank39;s target of 2.0. Inflation this year is to be lower than the 5.8 forecast in May, but higher than previously forecast in 2024, as the May forecast was for 2.8.

The ECB has been rapidly raising rates since the middle of 2022 to stem record price growth, making credit for the economy more expensive a factor that hit the growth forecast.

The sharp slowdown in the provision of bank credit to…