Core inflation marks a record high in Europe, with Spain two points above it

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January data (5.3%) strengthens ECB position for another 50 basis point rate hike at next March meeting

Shopping cart prices are not giving up in Europe despite each country’s measures. January data confirmed by Eurostat this Thursday reveal that underlying inflation (which does not include energy or fresh food) has reached a new all-time high, at 5.3% on average in the eurozone, one-tenth more than December’s data .

In addition, Eurostat data makes it possible to compare the figures by eliminating products. And the data is much higher if only energy is excluded from inflation and all food is kept, reaching 7.3%, the highest data in the series and five points higher than a year ago.

And if only the increase in energy prices is taken into account, the data for January shows a moderation from 25.5% in December to 18.9% in January. For fresh food, the price increase in the first month of the year was 11.3%, compared to 12% the previous month.

This data reinforces the European Central Bank’s (ECB) stance to pass another 50 basis point rate hike at its March meeting, when it will release its new macroeconomic projections for the eurozone. Last week, the German representative on the ECB’s board, Isabel Schnabel, warned that the region is “still a long way from victory” in its fight against inflation.

“A broad process of disinflation has not even begun in the Eurozone,” he stated, referring to the high core level and pointing out that the evolution of prices that discount the impact of energy and food “plays an important role” in thinking of the ECB.

In Spain, underlying inflation data recorded its highest level since 1986 in January, at 7.5%, one and a half points above headline inflation (5.9%). The ministry led by Nadia Calviño is confident that this figure will reflect the fall in general inflation and energy costs in the coming months.

The headline inflation rate eased slightly in January to 8.6% in euro area countries, after 9.2% in December. This is a much higher figure than that of Spain, which registered the best figure among European countries (5.9%), only surpassed by Luxembourg by one tenth.

Source: La Verdad

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