Soaring food and energy prices have dealt a blow to Eurozone’s second and fourth-largest economies
Consumer prices in France and Spain resumed their upward trend in February, driven by higher food and energy costs, official statistics showed on Tuesday.
In France, the consumer price index increased by 6.2%, up from 6.0% in January, according to preliminary data from the statistics bureau Insee.
The report noted that food inflation edged higher to 14.5% from 13.3%, services prices were up to 2.9% from 2.6%, while prices of manufactured goods rose slightly to 4.6% from 4.5%, with the end of winter sales. Energy prices jumped 14.0% on year in February, Insee said.
The EU-harmonized index stood at 7.2% compared to 7% in January.
Meanwhile in Spain, which succeeded in containing price growth in the second half of 2022, inflation has now risen for two consecutive months in annual terms. Consumer prices increased 6.1% year-on-year in February, the National Statistics Institute (INE) reports.
Preliminary data showed that higher electricity and food prices were the key drivers of the increase.
Core inflation, which excludes volatile fresh food and energy prices, stood at 7.7% year-on-year, up from 7.5% recorded in January. Consumer prices, harmonized for comparison with other European Union countries, rose to 6.1% in February in annual terms from 5.9% in the previous month.
“The increase in Spain’s headline EU harmonized inflation is another reminder that the path of price growth will be choppy and sticky on its way down, as underlying price pressures remain strong,” Bloomberg economist Ana Andrade said. “While base effects will dominate over the next few months, bringing inflation meaningfully down by the summer, we still expect it to end the year at above 5%,” she added.
Economists project inflation in Spain and France will continue rising in the coming months, prompting more interest rate hikes by the European Central Bank. The ECB has already promised to raise rates by 50 basis points to 3% in March, to get soaring inflation in the 20-nation Eurozone under control. It may still need to raise interest rates significantly beyond March, as inflation remains too high, Bundesbank President Joachim Nagel warned earlier.
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