Inflation hits record of 5% in 19 countries using the euro

AP , AFP , Friday 7 Jan 2022

Consumer prices in the 19 countries that use the euro currency hit a record high of 5% in December compared with a year earlier.

Europen Central Bank (ECB)
File Photo: Europen Central Bank (ECB) in Frankfurt am Main, western Germany, on December 16, 2021. AFP

The five percent figure is a first estimate but confirms a trend led by soaring energy prices, rising from 4.9 percent in November to a quarter-century high.

These figures are well above the European Central Bank's target of 2.0 percent inflation in the eurozone.

But the ECB believes that this inflation is transitory and should fall in 2023, after peaking in 2022.

The surge in prices in recent months is mainly due to the exceptional rise in gas and electricity prices.

In December, the annual increase in energy prices reached 26 percent, far ahead of the other products surveyed in Eurostat's basket.

Food, alcohol and tobacco prices nevertheless rose by 3.2 percent, ahead of industrial goods on 2.9 percent and services at 2.4 percent.

Among large countries, the highest increases were in Spain at 6.7 percent and Germany at 5.7 percent.

Conversely, prices remained more moderate in Italy and France, according to harmonised European data calculated by Eurostat.

Inflation was particularly high in the Baltic States, with the highest level for the euro area recorded by Estonia at 12 percent and Lithuania with 10.7 percent.

Inflation is now at the highest level in the eurozone since recordkeeping began in 1997 and broke a record set in November.

Soaring prices are compounding problems for European Central Bank policymakers who have been keeping interest rates at ultra-low levels to stimulate the economy amid the global pandemic.

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