(CercleFinance.com) – The pace of inflation slowed down slightly in the euro zone in February, mainly due to a drop in energy prices, but this deceleration does not seem to completely reassure economists.
The euro zone’s annual inflation rate hit 8.5% last month, down slightly from 8.6% in January, according to a flash estimate released this morning by Eurostat, the statistical office of the European Union.
For economists, this gradual decline in prices does not alleviate the pressure on the shoulders of the European Central Bank, forced according to them to increase the pace of its monetary tightening.
‘The rise in core inflation will reinforce the conviction of ECB members that significant rate hikes are necessary’, react this morning the teams of Capital Economics.
Significantly, so-called ‘core’ inflation, i.e. excluding energy, food, alcohol and tobacco, indeed accelerated to 5.6% over one year in February, a historic high, after + 5.3% in January.
This phenomenon comes as the ECB has repeatedly stressed that it is focusing precisely on this underlying inflation rate at the present time.
“For a long time, we expected a rate hike of 50 basis points at the end of the meeting scheduled for two weeks and another in May, but further rate hikes at the following meetings are now to be considered”, believes Capital Economics.
For the London consultancy, the decline in core inflation is likely to prove to be a ‘very gradual’ process over the coming months.
‘The labor market remains exceptionally tight – as data released this morning showed with the unemployment rate stable at 6.7% in January in the euro zone – and the latest surveys point to continued strength in the labor market. ’employment’, emphasizes Capital Economics.
‘This should keep inflation in the services sector, which alone accounts for almost two-thirds of core inflation, at high levels’, continues the research firm.
On the financial markets, the pan-European Euro STOXX 50 index fell by 0.4% after the publication of these figures, a sign that fears linked to inflation continue to worry investors.
Copyright © 2023 CercleFinance.com. All rights reserved.
Did you like this article ? Share it with your friends with the buttons below.
