Eurozone inflation hits record high of 5%
A view of the Les Halles shopping center, Paris, France, November 24, 2021. /CFP

A view of the Les Halles shopping center, Paris, France, November 24, 2021. /CFP

Eurozone inflation soared in December to its highest annual rate since records began in 1997, the Eurostat agency said Friday.

Inflation in the 19 countries sharing the euro rose to 5 percent from 4.9 percent in November, well ahead of analysts' expectation for 4.7 percent.

The rise is likely to put pressure on the European Central Bank (ECB) to review its monetary policy.

The ECB believes that this inflation is transitory and should fall in 2023, after peaking in 2022.

Energy prices, up 26 percent compared to a year earlier, remained the main driver but the increases for food, services and imported goods were also all well above the ECB's overall 2 percent inflation target.

In December, the annual increase in energy prices reached 26 percent, far ahead of the other products surveyed in Eurostat's basket.

Food, alcohol and tobacco prices nevertheless rose by 3.2 percent, ahead of industrial goods on 2.9 percent and services at 2.4 percent.

Still, no policy action from the ECB is likely anytime soon.

The bank curbed but extended stimulus only a few weeks ago, so no big review of its stance is likely before March.

The ECB also argues that wage growth, a precondition of durable prices pressures, is anaemic, while the surge in coronavirus infections will likely curtain economic activity and weigh on inflation.

(With input from Reuters, AFP)

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