Euro zone inflation jumps past ECB target

Euro zone inflation jumps past ECB target

International News

Euro zone inflation surged to a four-year high last month, zooming past the European Central Bank’s target and piling pressure on rate setters to open talks about when and how extraordinary stimulus measures will be scaled back. Inflation in the 19 countries sharing the euro rose to 2.0 percent from 1.8 percent in January, Eurostat data showed on Thursday, the highest since the start of 2013 and just above the ECB’s target of a rate just below 2 percent. Producer price inflation, which feeds into overall inflation with a lag, meanwhile surged to an annual 3.5 percent rate from 1.6 percent, hinting at building pressure for underlying price growth. Still, the ECB is likely to resist any call to step off the accelerator when it meets next week, arguing that the oil price fuelled inflation surge is temporary, growth is fragile and the outlook is fraught with uncertainty given elections in France, Germany, the Netherlands and possibly Italy. Underlying inflation is also weak, holding steady at 0.9 percent last month, suggesting that once the oil price surge passes through the numbers, inflation will fall back down, staying below the ECB’s target possibly through 2019.