The strongest price driver was again energy.
(Photo: ddp/Stefan Zeitz Xinhua / eyevin)
Frankfurt The inflation rate in the euro area increased again at the beginning of the year. Prices rose by 5.1 percent, according to an initial estimate by the European statistics office Eurostat. Economists had initially expected a decline – to 4.4 percent. However, data from individual EU countries such as Germany published at the beginning of the week had already indicated a higher value. In December, the price increase was 5.0 percent.
Experts had originally expected a stronger decline because certain special effects expired at the beginning of the year. On the other hand, certain prices, such as for gas, are usually adjusted at the beginning of the year. Energy prices in particular have continued to rise recently.
This is heating up the debate on the central bank’s course ahead of the European Central Bank’s (ECB) Council meeting next Thursday. In December, they decided that they would largely stick to their very loose monetary policy this year and only slowly reduce their massive purchases of bonds. Investors are now betting against it and are already pricing in two rate hikes this year. But only one side can be right.
Investor expectations are mainly driven by two factors. On the one hand, the US Federal Reserve recently signaled that monetary policy would be tightened much more quickly. At last week’s meeting, she announced not only several interest rate hikes for this year, but also a reduction in the balance sheet. In addition, given the inflation figures at the beginning of the year, there are already indications that the rate could also be higher than expected for the year as a whole.
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