BRUSSELS
Inflation across the Eurozone surged to 5.1 percent in January from 5 percent in the previous month, despite optimistic expectations for a sharp drop to 4.4 percent, data from Eurostat showed on Wednesday.
Inflation is now more than twice the ECB’s 2% target. The latest growth reportedly reflects the hottest rate of inflation across the 19 countries that have shared the euro since the records began.
Meanwhile, the single currency jumped by 0.3% to $1.13050, touching a one-week high to the US dollar, on the expectation that the ECB would signal a faster path for policy tightening as early as Thursday.
The ECB’s Governing Council is scheduled to gather this week, with an announcement due on Thursday afternoon. The soaring cost of living in Europe is putting pressure on the regulator to tighten money printing.
The ECB is expected to decide whether to keep implementing extremely loose monetary policy or keep running against signals from the US Federal Reserve and the Bank of England that they are planning to launch a rapid rate hike cycle this year to tame the inflation growth.
ECB President Christine Lagarde had previously signalled that a rate hike was unlikely in 2022. Interest rates in the Eurozone are currently at historic lows, however, markets are pricing in around two hikes from the regulator this year.
Meanwhile, the cost of heating and electricity in Germany increased by 107% and 41% respectively over the past year, Der Spiegel reported, citing a spokesperson of the Check24 portal, which compares prices for goods and services in the country.
Same is the case with the rest of Europe. According to data, the average household in Germany had to pay €1,193 for gas and fuel oil in January 2021, with the cost rising to almost €2,472 last month. The main reason for that was the sharp rise in energy prices, the newspaper said, adding that high wholesale gas prices have affected end-user prices.
The price for 5,000 kilowatt-hours of electricity hit a record high of €2,130 in January 2022. That is 41% higher than in the same month last year, Der Spiegel wrote.
According to the Check24 spokesperson, the dramatic rise was the result of the increased cost of generating electricity from coal and gas power plants, as well as a decline in production of renewable energy and higher domestic demand.
