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May 16, 2022

Eurozone inflation above European Central Bank’s target

Inflation in the Euro zone remained markedly above the European Central Bank’s (ECB) target in June, at 2.7 per cent, official figures showed on Thursday, boston.com informs. These results reinforced market expectations that the bank will raise interest rates again next week. In its first estimate, Eurostat, the European Union’s (EU) statistics office, said consumer prices rose by 2.7 percent in the year to June. That was unchanged on May’s rate but slightly below the consensus in the markets of an uptick to 2.8 percent. Inflation has been above the ECB’s target of keeping inflation close to but below two percent since November, largely because of rising commodity and food costs. In April, the ECB became the first major central bank to start raising interest rates from the super-low levels they were reduced to during the global recession, even though the Euro zone is still grappling with a severe debt crisis, notably in Greece. Jean-Claude Trichet, speaking to the European parliament, reiterated that the bank was “in a state of strong vigilance”. “Inflation is likely to stay clearly above 2 per cent over the months ahead” he added.

His comments came shortly before eurozone inflation data were released, showing inflation steady at 2.7 per cent, higher than the 2 per cent target for the seventh consecutive month. Trichet said high energy and commodity prices had pushed inflation up earlier in the year and still posed a risk to the medium-term outlook.

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