Setback for the ECB as inflation rises unexpectedly in two of the eurozone’s biggest economies
The European Central Bank faces a major headache after inflation rose unexpectedly in two of the eurozone’s biggest economies.
French inflation rose from 7 per cent to 7.2 per cent in February – taking it to the highest level since the launch of the euro in 1999. In Spain, it rose from 5.9 per cent to 6.1 per cent.
The figures cast doubt over hopes that figures tomorrow will show inflation across the entire eurozone fell to 8.1 per cent in February from 8.6 per cent.
Inflation fight: The European Central Bank has already raised rates from minus 0.5% last July to 2.5% and looks set to hike them to 3% on March 16 and to 4% by the end of the year
A higher than expected figure will pile pressure on the ECB to press ahead with further aggressive interest rate hikes.
The central bank has already raised rates from minus 0.5 per cent last July to 2.5 per cent and looks set to hike them to 3 per cent on March 16 and to 4 per cent by the end of the year.
‘French inflation has not reached its peak,’ said ING economist Charlotte de Montpellier.‘Given how underlying global inflation will probably continue to go up in the coming months, that will give further arguments to the ECB to continue to raise rates.’
