Euro-zone inflation moderated somewhat last month despite another quickening of the rate of underlying price growth, confirming estimates published earlier this month.
Released on Friday, new data from the European Union’s statistics agency, Eurostat, indicates that prices were 8.5 per cent higher across the single-currency area last month than they were in February 2022, a modest decline from January’s 8.6 per cent reading.
However, annual core inflation – a measure of price growth that strips out volatile food and energy prices – accelerated from 5.3 per cent in January to 5.6 per cent.
Inflation in the Irish economy unexpectedly rose to 8.5 per cent in February, up from an annual increase of 7.8 per cent in January, the data also confirms, stoking further concern that price growth may prove stickier than previously anticipated.
Released on Thursday, the Central Statistics Office’s official measure of inflation – the consumer price index (CPI) – indicated that prices on average rose by 1.6 per cent between January and February. Before February, the CPI had fallen for three consecutive months.
The European Central Bank (ECB) on Thursday stuck with its plan to raise interest rates by a further 50 basis points as policymakers continue their efforts to tame stubbornly high inflation. Some analysts had expected Frankfurt to opt for a smaller rates increase in light of the turmoil that has engulfed financial markets over the past week amid the collapse of three US banks and the issues around Swiss lender Credit Suisse.
At a press conference on Thursday, ECB president Christine Lagarde said there has been “some slight improvement” in inflation “but, frankly, not a lot”.
She said: “We are not waning on our commitment to fight inflation and we are determined to return inflation back to 2 per cent in the medium term – that should not be doubted.”
Friday’s data will be of concern to policymakers, given that the price of services made one of the biggest contributions to the headline figure. Some economists believe that when price growth passes from commodities, such as an energy, into the wide-ranging services sector, which includes things such as childcare, inflation can become “sticky” as it translates into wage demands.
However, wage growth in Ireland has, so far, not kept pace with inflation despite a sharp pickup across the euro zone in the fourth quarter of last year.
