Eurozone inflation tops European Central Bank target
- Author: Rita Burton Mar 04, 2017,
Mar 04, 2017, 0:46
German inflation probably picked up in February, surpassing the European Central Bank's target of a rate just under 2 percent for the first time in more than four years, regional data suggested on Wednesday.
Inflation in the 19-member euro area rose to 2 percent last month, from 1.8 percent in January, increasing pressure on the European Central Bank, which targets inflation of below but close to 2 percent, to end loose monetary policy.
German inflation is even higher than the eurozone average at 2.2 percent. The core measure of inflation-which strips out items such as energy and food-was unchanged at 0.9%, while prices of manufactured goods rose at a slower pace than in January.
Energy prices rose 9.2% in the year from 8.1% in January and compared with an 8.1% decline in the year to February 2016. "After its meeting next week, the ECB is likely to reiterate its view that the latest pick-up in inflation will be transitory and we see the Bank carrying out this year's asset purchases as planned".More news: Adele, joined on stage by drag impersonator
The price increase reading for the month under review was the highest since August 2012, slightly outpacing a 2.1-percent forecast from analysts surveyed by Factset. "Inflation will remain this high in the coming months", Postbank chief economist Marco Bargel said, adding that core inflation would also pick up due to Germany's continued upswing and its robust labor market. And it has encouraged stimulus skeptics who think the European Central Bank is close enough to its goal of bringing inflation sustainably to just below 2 percent that it can start thinking about when to signal a gradual exit from stimulus efforts slated to run through the end of this year. It's stubbornly stayed there since December, during which time the headline rate has almost doubled from 1.1 percent.
Bank officials point out that the current increase in inflation is largely the result of comparisons with a period of very low oil prices a year ago. The main reasoning behind the stimulus has been to get inflation back to target by lowering borrowing rates and promoting economic growth.
The ECB is scheduled to run its quantitative easing bond-buying scheme until at least December and has pushed interest rates deep into negative territory to try to stimulate weak growth and hitherto stubbornly low inflation.
Other data from Eurostat on Thursday revealed a small fall in the number of unemployed people, which left the euro-zone unemployment rate unchanged at 9.6%.