European Inflation Soars To Record High, Pressures ECB

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by Tyler Durden
Tuesday, May 31, 2022 - 12:27 PM

Following Germany's post-Weimar record high inflation print, the European Union's consumer price inflation data this morning surged to a record high at +8.1% YoY (notably hotter than the +7.8% YoY expected).

Source: Bloomberg

The inflation impulses are broad based across all the major European nations...

Source: Bloomberg

The surge in European inflation is dominated by energy prices rising, and food costs...

Source: Bloomberg

Finally, we note that the recently agreed EU import ban on a major portion of Russian oil, meanwhile, risks further stoking pressure on prices.

The report comes just 10 days before a crucial ECB meeting where officials are set to announce the conclusion of large-scale asset purchases and confirm plans to raise interest rates in July for the first time in more than a decade.

“Inflation is an enormous economic risk,” German Finance Minister Christian Lindner told a news conference in Berlin.

“We must fight it so that no economic crisis results and a spiral takes hold in which inflation feeds off itself.”

President Christine Lagarde indicated last week that quarter-point increases are likely at meetings in July and September.

As Bloomberg reports, Chief economist Philip Lanebacked that timeline on Monday, calling moves of that size a “benchmark pace” in exiting stimulus, which also includes large-scale bond-buying.

Some officials have floated the idea of hiking by a half-point for the first time in the ECB’s history -- mirroring the latest Federal Reserve decision. Dutch Governing Council member Klaas Knot has said inflation numbers for May and June will determine whether such a step is warranted.

Get back to work Mrs. Largarde!