Euro area CPI jumps past forecasts again in February
By Alexander Bueso
Date: Wednesday 02 Mar 2022
(Sharecast News) - The cost of living in the Eurozone accelerated more sharply than expected last month amid the ongoing surge in energy prices.
According to Eurostat, in seasonally adjusted terms, the annual rate of increase in consumer price inflation in the euro area accelerated from 5.1% for January to 5.8% in February.
Economists had penciled-in a rise of 5.3%.
The month-on-month gain in headline CPI was also hefty, at 0.9%, led chiefly by a 3.3% jump in energy and a 1.2% in non-processed food costs.
Nevertheless, price gains were widespread, with food, alcohol and tobacco prices rising by 0.6%, those of non-energy industrial goods by 0.7% and those of services by a more modest 0.4%.
At the so-called 'core' level, which for the European Central Bank excludes food, energy, alcohol and tobacco, the annual rate of CPI inflation increased by four tenths of a percentage point versus the month before to reach 2.7%.
In annual terms, the pace of increase in non-energy industrial goods prices picked up from 2.1% to 3.0% and that of services from 2.3% to 2.5%.
Headline CPI increases were more modest in annual terms in the single currency bloc´s largest economies, Germany and France, than in the likes of Italy and Spain.
German headline CPI accelerated from a 5.1% clip in January to 5.5% for February, while in France it went from 3.3% to 4.1%.
In Italy on the other hand, CPI increased at a 6.2% pace last month, which was up from 5.1% in January, while in Spain it was up by 7.5%, against a 6.2% increase during the previous month.
Commenting on the latest CPI figures, Jack Allen-Reynolds at Capital Economics singled out the new record high for core CPI, which he said suggested that more was at work than just one-off increases.
His forecast was for headline euro area-wide CPI to end 2022 at around 4.0%.
"Looking ahead, all of the latest survey indicators suggest that price pressures remain extremely strong, so we expect core inflation to rise even further," he said in a research note sent to clients.
"Together with higher energy and food inflation, this should push the headline rate up above 6%, probably in March. Beyond that, both headline and core inflation look sure to remain above the 2% target well into next year if not for a lot longer."
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