Euro zone inflation surged to 7.5% in March, hitting another record high with months still left before it is set to peak, making grim reading for the European Central Bank, which needs to reconcile sky-high prices with vanishing economic growth.
Consumer price growth in the 19 countries sharing the euro accelerated from 5.9% in February, Eurostat said on Friday, far beyond expectations for 6.6%, as war in Ukraine and sanctions on Russia pushed fuel and natural gas prices to record highs.
Inflation excluding food and fuel prices, closely watched by the ECB, picked up to 3.2% from 2.9% while a narrower measure that also excludes alcohol and tobacco products jumped to 3.0% from 2.7%.Its main task is to get inflation to 2% but tightening policy now would risk crashing an economy that is already reeling from the fallout of the war in its neighbour and the lingering impact of the COVID-19 pandemic.
That would suggest the bloc is near a state of stagflation, where rapid inflation is coupled with stagnating growth. But the ECB can hardly ignore high inflation, especially since it says the peak is still three to four months away.
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