Frankfert-Eurozone inflation was stable at a record high of 7.4% in April due to soaring fuel and food, the EU Census Bureau announced Wednesday, lowering estimates from the tentative 7.5%. rice field.
Inflation has skyrocketed over the past year. Initially it was a post-COVID supply bottleneck, and then the knock-on effect of the Russian war in Ukraine pushed up prices from raw materials to finished goods.
Price presses are so widespread that even potential inflation that excludes volatile food and fuel costs is well above the European Central Bank’s target of 2%, and high prices are rising. Indicates that there is a risk of establishment.
Inflation, excluding energy and food, accelerated from 3.2% in March to 3.9% in April, and narrower measures to exclude alcohol and tobacco rose from 3% to 3.5%, according to Eurostat. ..
This inflation expansion is the main reason the ECB is almost certain to raise interest rates in July, with a series of interest rate fluctuations that could return negative 0.5% deposit rates to the positive territory by the end of the year. start.
ECB policymakers are increasingly worried that inflation, once considered a mere “hump,” is still on the rise and will require more stringent financial conditions to return to less than 2%. I am.
The European Commission estimates that inflation in 2023 will rise to 2.7% this week, suggesting that inflation will far exceed the ECB’s target for at least the third consecutive year.
Rising service inflation from 2.7% to 3.3% may also be relevant to policy makers, as services are labor-intensive and therefore likely to fuel wage pressure.
Rapid wage growth is a prerequisite for lasting inflation, but it is also primarily a backward indicator, suggesting that as acceleration progresses, it becomes more difficult to curb.
Among the members of the euro area, inflation was the highest in the Baltic states in April, with Estonia exceeding 19%. It was the lowest in France and Malta, both at 5.4%.
By Balazs Koranyi