FRANKFURT (Germany) — For the third consecutive month, inflation caused by high oil prices reached record levels in Europe, causing further pain for consumers and raising questions about the European Central Bank’s future plans.
According to Eurostat, consumer prices increased by 5.1% annually in January among the 19 euro-using countries. This was the highest figure since 1997, when records were broken with a record of 5% in December or 4.9% in November.
saw an increase in energy prices by a shocking 28.6%. As the world economy recovers from the worst COVID-19 restrictions, oil prices have risen while natural gasoline prices have risen in Europe due to depleted winter supplies, lower Russia supplies, and fears of a renewed military action by Moscow against Ukraine.
As governments offer tax breaks and subsidies to help reduce household budget pressures, higher energy bills have become a political issue. High inflation has made it more costly for people, to purchase everything, from food to fuel. This is one reason Europe’s recovery has been hampered by.
According to Germany’s ADAC motoring organization, gasoline prices have risen to a new record of 1.712 euros per gallon. This is equivalent to $7.31 per gallon.
In the eurozone, economic growth was slowed to 0.3% over the last three months of 2021 by coronavirus infections caused by the omicron variant. This led to new restrictions that discouraged consumers from engaging in in-person activities like eating out.
The European Central Bank’s Thursday policy meeting has been refocused because of high inflation. Christine Lagarde, Bank President, has stated that much of the inflation can be attributed to temporary factors which should eventually diminish.
She has stated that it is “very unlikely” that the bank will raise interest rate this year. This is the antidote central banks use to combat excessive inflation.
According to Andrew Kenningham (chief Europe economist at Capital Economics), the bank may drop the “very” and “unlikely” prefixes on Thursday, but it would still follow its roadmap based on plans for phasing out its last pandemic stimulant by 2022.
Kenningham stated that this would allow the bank to raise rates. The first increase will be in 2023. However, a second hike at the end of the year is possible.
The stance of the European Central Bank is very different from that of the U.S. Federal Reserve has indicated that it may begin a series rate increases as soon as March. U.S. U.S. Consumer Inflation hit 7% in December. This was a record for the country, which is 40 years old.
Analysts predict that markets will watch to see if the European Central Bank’s outlook changes. The European Central Bank expects that inflation will fall sharply in 2018 and drop to 1.8% by 2023 and 2024.
It points out temporary inflation factors such as bottlenecks in delivery of parts and raw material that limit supply and drive up prices. Also, it compares to very low energy prices during the worst pandemic slowdowns. These comparisons will eventually be dropped from inflation statistics.
In the eurozone, economic growth was slowed to 0.3% over the last three months of 2021 by coronavirus infections caused by the omicron variant. This led to new restrictions that discouraged consumers from engaging in in-person activities like eating out.
The European Central Bank’s Thursday policy meeting has been refocused because of high inflation. Christine Lagarde, Bank President, has stated that much of the inflation can be attributed to temporary factors which should eventually diminish.
She has stated that it is “very unlikely” that the bank will raise interest rate this year. This is the antidote central banks use to combat excessive inflation.
According to Andrew Kenningham (chief Europe economist at Capital Economics), the bank may drop the “very” and “unlikely” prefixes on Thursday, but it would still follow its roadmap based on plans for phasing out its last pandemic stimulant by 2022.
Kenningham stated that this would allow the bank to raise rates. The first increase will be in 2023. However, a second hike at the end of the year is possible.
The stance of the European Central Bank is very different from that of the U.S. Federal Reserve has indicated that it may begin a series rate increases as soon as March. U.S. U.S. Consumer Inflation hit 7% in December. This was a record for the country, which is 40 years old.
Analysts predict that markets will watch to see if the European Central Bank’s outlook changes. The European Central Bank expects that inflation will fall sharply in 2018 and drop to 1.8% by 2023 and 2024.
It highlights temporary inflation factors such as bottlenecks in delivery of parts and raw material that limit supply and drive up prices. Also, it compares to very low energy prices during the worst pandemic slowdowns. These comparisons will eventually be dropped from inflation statistics.