December inflation in the eurozone is confirmed at 5.0%, a historical record

BRUSSELS, Jan 20 – Euro zone consumer prices rose at a record pace in December, the European Union’s statistical office confirmed on Thursday, boosted by rising energy prices and price cuts. bottles in the supply chain as the economy recovers from pandemic lockdowns and restrictions.

The statistical office of the European Union, Eurostat, said that consumer prices in the 19 countries that share the euro rose 0.4% month-on-month in December, for a year-on-year jump of 5.0%, the same as the initial estimate. published on January 7.

Energy was responsible for 2.46 percentage points of the global year-on-year increase, and services for 1.02 points. Non-energy industrial goods added 0.78 points and food, alcohol and tobacco, another 0.71 points.

Without volatile food and energy prices, or what the European Central Bank calls core inflation, prices rose 0.4% month-on-month and 2.7% year-on-year. An even narrower measure, which also excludes alcohol and tobacco, showed prices rose 2.6% year-on-year.

The ECB wants to keep headline consumer inflation at 2% over the medium term, but has consistently underestimated price pressures and has been criticized for this by some of its own leaders.

With the economy recovering rapidly from repeated lockdowns triggered by the COVID-19 pandemic, energy prices soared, catching the ECB off guard, which a few months ago had expected only a benign uptick in inflation.

Adding to the upward pressure were bottlenecks in the supply chain as households, with money saved, sharply increased spending on everything from new cars to restaurant meals.

Most of these inflation drivers are temporary, so price pressures should ease over time. However, opinions differ on how quickly inflation will come down and where it will settle once the economy adjusts to the new normal.

The ECB believes that inflation will fall back below 2% by the end of this year, but a long list of influential monetary policy makers casts doubt on this, warning that the risks are tilted towards higher figures and that the values ​​for above the target could persist into next year.