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Eurozone inflation hit an unexpected record in ECB testing

Eurozone inflation has already accelerated beyond record levels, countering expectations of a slowdown and complicating the mission of European Central Bank (ECB) officials claiming the current surge. The euro has risen.
Consumer prices rose 5% year-on-year in December. This is faster than last month’s 4.9% rise and above the median Bloomberg economist survey of 4.8%. The measured value for removing volatile components such as food and energy was 2.6%, which is in agreement with the measured value in November.
Meanwhile, the economic confidence of the euro area has slipped more than analysts expected in the emergence of highly contagious Omicron variants of the coronavirus.
Inflation data yesterday has increased pressure on the ECB after supply chain turmoil and rising energy costs have pushed up price increases the fastest since the common currency was created.
Frankfurt-based financial institutions have planned to withdraw from stimulus during the crisis, but more aggressive monetary tightening by other major central banks has encouraged some officials to take a tougher stance. became.
President Christine Lagarde said last month that inflation remained rising in the short term and could slow down in 2022 to fall below the 2% target. She said the rate hike would not be the right response to the current price hike. This is because when the pressure is already relieved, the effect is only felt later.
It has not stopped the money markets betting on rising interest rates later this year. The euro on Friday rose 0.1% against the dollar to $ 1.1304.
Despite the December acceleration, many see eurozone inflation probably now at or near its peak. Bank of France Governor François Bilroy de Garhow said the same this week after data showed that consumer prices in the second-largest economy in the currency region stabilized in December.
Inflation has slowed from its highest levels in Germany last few decades. Germany’s 10-year yield was stable at minus 0.06%, unresponsive to Friday’s eurozone figures.
Nikola Nobile, Italy’s chief economist at Oxford Economics, said in an email report to customers that “despite the difficult road ahead, inflation has begun to end in the coming months. “. “Inflation is projected to drop to 3.9% in the first quarter, averaging 2.6% across 2022, thanks to energy pressure relief and supply bottlenecks.”
But energy is still a headache. Natural gas prices rose again this week after Russia curtailed deliveries to Western Europe, threatening to put pressure on consumers and force companies in energy-dependent industries to cut production. France’s finance minister Bruno Le Maire yesterday called the energy surge a “absolute emergency.”
Omicron is also confusing the outlook, and analysts are uncertain whether the turmoil it causes will cause inflation or the opposite effect by curbing economic recovery.
Yesterday’s sentiment report from the European Commission showed growing concern that pandemics would undermine trust between consumers and the retail and services sectors.
Uncertainty has led ECB authorities to seek flexibility in their approach to inflation. Board member Martins Kazax said in an interview this week that policymakers will act if price outlooks improve.

http://www.gulf-times.com/story/707568/Euro-area-inflation-unexpectedly-hits-record-in-te Eurozone inflation hit an unexpected record in ECB testing

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