Consumer prices climbed in May by an average of 8.1 percent over the year, as the statistics office Eurostat announced on Friday, thereby confirming an initial estimate. In April and March, inflation was still 7.4 percent. The inflation rate is now more than four times the target set by the European Central Bank (ECB). The central bank is aiming for 2.0 percent inflation as the optimum level for the economy in the medium term.
Because of the development, the currency watchdogs have now initiated a change of course after a decade of ultra-loose monetary policy. The ECB has announced that it intends to raise the most important interest rates by 0.25 percentage points in July. That would be the first rate hike in eleven years. And further steps upwards are firmly planned. There are already votes from the central bank to raise interest rates even more sharply by 0.50 percentage points at the September meeting. From the point of view of France’s central bank chief Francois Villeroy de Galhau, the ECB must act because the price surge is now broad-based.
According to Eurostat, energy prices rose by 39.1 percent year-on-year in the wake of the Ukraine war in May. Unprocessed food prices climbed 9.0 percent and services rose 3.5 percent. Prices rose across the board, as reflected in the so-called core rate, which excludes volatile energy and unprocessed food prices. That rate increased to 4.4 percent in May. In April, the core rate was still 3.9 percent.
Here you can find the current developments in consumer prices in Austria:
Source: Nachrichten
