Thursday, March 28

Inflation in the euro zone shoots up to 7.4% in March


A man with the shopping cart. / afp

Spain widens the spread with the region by 2.4 points and Luis de Guindos admits that the ECB’s first rate hike could be brought forward to July

Clara Dawn

Confirmed. The rise in energy prices aggravated by the war in Ukraine triggered inflation in the euro zone in March to 7.4%, compared to 5.9% registered in February. It is one tenth less than the 7.5% registered in the first reading published at the beginning of April by the community statistical office, Eurostat. But it keeps the figure at an all-time high in a complex scenario in which energy prices continue to put pressure.

Specifically, and according to the data released this Thursday, the rise in prices in the region responded to a year-on-year rise of 7.8% in the cost of fresh food, compared to 6.2% the previous month, while the rise in the price of energy accelerated to 44.4% from 32% in February, three tenths less than anticipated in the first estimate of the data.

On the other hand, services became more expensive by 2.7% year-on-year, two tenths more than in February, while non-energy industrial prices rose by 3.4%, compared to the rise of 3.1% in the previous month.

Excluding the impact of energy from the calculation, year-on-year inflation in the euro zone stood at 3.4% in March, compared to 3.1% in the previous month, while also excluding the effect of electricity prices fresh food, alcohol and tobacco, the core inflation rate reached an all-time high of 2.9% from 2.7% in February.

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Gap with the region

Spain is among the countries with the greatest impact of price increases, with inflation of 9.8%, widening the unfavorable price differential compared to the average to 2.4 percentage points. But there are regions with worse references. Specifically, the largest increases in prices were recorded in Lithuania (15.6%), Estonia (14.8%) and the Czech Republic (11.9%), while the least strong increases corresponded to Malta (4.5%). ), France (5.1%) and Portugal (5.5%).

With these figures on the table, it is clear that inflation will not be a transitory phenomenon. Or, at least, not as much as the European Central Bank (ECB) itself expected at the end of last year, when the first outbreaks of rising prices already worried the markets, but not so much the monetary institution.

Now, and given the evidence that inflation will continue at high levels for longer than anticipated, the monetary institution has begun to prepare investors for the beginning of the end of its stimulus policies. In its last meeting in April, the institution confirmed that it will finish its debt purchases in the third quarter of the year.

But Christine Lagarde insisted that the first rise in interest rates would only take place “some time after” the end of the program, although she made it clear that everything will depend on the evolution of economic data and its impact on the stability objective. of prices.

Despite being more flexible than expected, the concern is notable in the institution. Something that has become clear again this Thursday with the vice president of the ECB, Luis de Guindos, opening the door for the first rise in interest rates to arrive as early as July.

His statements, collected from an interview with Bloomberg, come just a week after the last meeting of the institution. And although he explains again that the decision will depend on the data seen in June, he makes it clear that it is not necessary for the movement to occur automatically at the end of the debt purchase program.

“From today’s perspective, July is possible and September, or later, is also possible. We will look at the data and only then will we decide,” Guindos said. “Theoretically, anything is possible,” he insisted.


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