Inflation is also particularly driven by food.
(Photo: IMAGO/Martin Wagner)
Frankfurt Inflation in the euro area remains at a high level in February. Consumer prices rose 8.5% percent compared to the same month last year. This was announced by the European statistical office Eurostat on Thursday based on an initial estimate.
Economists surveyed by the Reuters news agency had previously expected a rate of 8.2 percent. In January, the inflation rate was 8.6 percent.
Energy price inflation continued to slow, with prices up 13.7 percent from 18.9 percent in January. Food prices increased by 13.6 percent (January: 11.3).
Currency watchdogs are particularly worried about core inflation, which excludes these two items as well as alcohol and tobacco. Core inflation was 5.6 percent in February, the highest level since monetary union began. It also confirms its rising trend – it’s the third consecutive rise.
Core inflation is considered a good indicator of the medium-term price trend. It is currently often used by central bankers as an argument that price pressure is still increasing across the board even though headline inflation is falling. Thomas Gitzel, chief economist at VP Bank, spoke of an “alarm signal” because inflation was proving to be more stubborn.
The European Central Bank (ECB) is aiming for an inflation rate of 2.0 percent, which is optimal for economic development, but has failed to meet this target for some time. The central bank has been trying to counteract the strong price pressure with a series of interest rate hikes since the summer of 2022.
The ECB’s next interest rate decision is due in mid-March. An increase by a further 50 basis points is considered agreed. Further steps may also be necessary at subsequent meetings. Bundesbank President Joachim Nagel, among others, spoke out in favor of further tightening this week.
ECB President Christine Lagarde also made it clear on Spanish television on Thursday that further steps could follow. “At this point, it’s possible that we can continue down this path,” she said. “What is very certain is that we will do everything that is necessary to bring inflation back to two percent.” Lagarde had also signaled this determination at the most recent press conferences.
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