Consumer prices in the Eurozone rose by 2.4 percent in January compared to the same month one year ago. The sharp jump in prices is being attributed to higher energy and commodity costs and is sure to be a central discussion when the European Central Bank (ECB) meets later this week.
Tasked with keeping inflation below a two percent target, there is growing speculation that the ECB may hike interest rates to ease the pace of spending and slow the rate of growth within the economy. Most economists believe a rate increase at this time is remote however, as growth is expected to slow in the aftermath of wide-ranging government spending cuts.
“As the temporary boost from higher food and energy prices begins to reverse, we expect the headline rate of inflation to fall back to well below the ECB’s 2 per cent ceiling,” said Ben May, European economist at Capital Economics.
Source: BBC News
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