Rising energy prices are pushing inflation in the eurozone to record levels. Consumer prices rose by an average of 8.1 percent over the year in May, the Eurostat statistics agency announced on Friday, confirming an initial estimate. In April and March inflation was still 7.4 percent.
Inflation is now more than four times higher than the target of the European Central Bank (ECB). The central bank aims for an inflation rate of 2.0 percent as the optimum level for the economy in the medium term.
ECB wants to change course
As a result, the currency watchdogs have now initiated a change of course after a decade of ultra-easy monetary policy. The ECB has announced its intention to raise key interest rates by 0.25 percentage point in July. That would be the first rate hike in 11 years. And further steps up are firmly planned.
At the September meeting, the central bank has already voted to raise interest rates by a further 0.5 percentage point. From the point of view of French central bank chief Francois Villeroy de Galhau, the ECB must act because the price hike is now widely supported.
Energy prices drive up costs
According to Eurostat, energy prices rose 39.1 percent year-on-year in the wake of the Ukraine war in May. Prices of unprocessed foods rose 9.0 percent and services rose 3.5 percent.
Prices rose across the board, reflected in the so-called core rate, which excludes volatile energy and raw food prices. That percentage rose to 4.4 percent in May. In April, the core interest rate was still 3.9 percent.
Source: Krone
I’m Wayne Wickman, a professional journalist and author for Today Times Live. My specialty is covering global news and current events, offering readers a unique perspective on the world’s most pressing issues. I’m passionate about storytelling and helping people stay informed on the goings-on of our planet.
