EU inflation keeps rising as energy prices jump

BRUSSELS (AFP) – Eurozone consumer prices rose in March, official data showed yesterday, fuelled by a sudden jump in energy prices and a pick-up in activity despite the lingering pandemic in Europe.

Inflation in the 19 countries that use the euro reached 1.3 per cent, up from 0.9 per cent in February, the European Union’s (EU) Eurostat agency said.

Price gains were mainly driven by a hike of 4.3 per cent in energy prices, Eurostat said. Over the previous months, energy prices had fallen, sometimes steeply.

While temporary, higher inflation would continue until at least the summer, when the expected reopening of the economy will see a sudden jump in demand, said Charlotte de Montpellier, an economist at ING.

The hike “is an illustration of the recovery in activity, it is not worrying, because it is temporary,” she told AFP.

She also pointed to chokepoints in the global supply chain, most visibly demonstrated by the saga of the “Ever Given”, the megaship that was stranded in the Suez Canal for six days.

European Central Bank (ECB) Chief Christine Lagarde said earlier this month that rising consumer prices were a result of “temporary factors” linked mostly to the pandemic and would not prompt the bank to tighten its ultra-loose monetary policy anytime soon.

Indicating that demand was still sluggish in Europe, Eurostat said core inflation, which strips out energy and other more volatile items, fell in March to 0.9 per cent, from 1.1 per cent in February.

Pedestrians walk in a shopping street in the outlet centre Bataviastad in Lelystad, Northern Netherlands. PHOTO: AFP