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Euro zone inflation sees shock jump to new record
No relief for euro zone shoppers, and a mounting headache for central bankers…New figures Wednesday (February 2) showed inflation in the region jumping to a new record high of 5.1% in January. That surprised economists, who had predicted a fall.The rise was partly driven by soaring energy costs, which had been widely expected. But prices for some foods also jumped by 5%. Put together that means a big jump in everyday costs for households. Now the European Central Bank faces a dilemma. Policymakers there have repeatedly said that prices rises should start to ease off.But there’s little sign of that now, with inflation at more than twice the bank’s 2% target. That could change the calculation on rates for bank chief Christine Lagarde. Analysts polled last month didn’t see any prospect of a hike until the second half of next year. Now a growing number think rates will have to rise before then. For now though, the ECB continues to insist that inflation is a passing phase. It points to muted growth in wages as one factor keeping prices in check. But with every passing month, the argument is getting harder to make.
