Eurozone inflation hit 2 percent in May for the first time in more than two years, exceeding the European Central Bank’s target, complicating policymakers’ decision next week to maintain its extremely free monetary policy.
The jump of 1.6 percent in April was followed by an even faster acceleration in consumer prices in the United States. The rise in the eurozone is likely to raise investor concerns that central banks will help end last year ‘s huge monetary stimulus in response to the coronavirus epidemic.
The Governing Council will meet next week to decide whether to adjust its monetary policy, including the recent acceleration in bond purchases, in response to rising economic activity and prices when the Covid-19 blockade is eased.
Inflation in the eurozone has recovered from a few months below zero last year, prompting most economists to predict that it will exceed the ECB’s target of close but less than 2 percent this year.
However, some ECB policymakers, including its president Christine Lagardeվերջին say that the recent rise in inflation is only a temporary phenomenon, which is due to one-time effects և predicts that it will disappear next year. They argue that this means that the central bank’s policy must remain very comfortable.
The 13.1% year-on-year rise in energy prices in the eurozone was the main factor in pushing the harmonized index of consumer prices in the single currency area of 19 countries slightly above expectations to its highest level since October 2018, according to Eurostat,
Major inflation, excluding more volatile energy, food, alcohol and tobacco prices, rose more modestly than the headline, from 0.7 percent in April to 0.9 percent in May. In the services sector, prices weighed down by coronavirus blockades rose 1.1 percent.