(Finance and Economics) Inflation in Germany and Spain is heating up again, and the European Central Bank is about to raise interest rates
China News Agency, Beijing, May 31 (Reporter Liu Liang) Inflation levels in Germany and Spain, the major economies in the euro zone, rose again in May, further increasing the pressure on the European Central Bank to withdraw from its loose monetary policy.
According to the latest preliminary data released by the German Federal Statistical Office, the economic engine of the euro zone - Germany's consumer price index (CPI) climbed to 7.9% in May, setting a new record since the reunification of the two countries in 1990.Earlier, German inflation has hit a record high for two consecutive months, reaching 7.4% in April.
According to another indicator used by the EU to measure inflation and price stability, the Harmonized CPI, Germany's Harmonized CPI in May has risen by 8.7% year-on-year, which is also much higher than the market's previous inflation expectation of 8.1%.
Inflation data from Spain also showed signs of accelerating on the day German inflation data hit a record high.The data showed that Spain's adjusted CPI rose to 8.5% in May from 8.3% in the previous month.Spanish authorities had expected inflation to slow.
In terms of factors leading to rising inflation, energy and food prices are still the two major driving forces.In May, German energy prices rose by 38.3% compared with the same period last year, and food prices also rose by as much as 11.1% year-on-year.In Spain, where rising electricity prices are the main reason for the high inflation rate, data show that fuel and food prices are trending higher in the country.
The rise in inflation levels in Germany and Spain in May is the tip of the iceberg of current inflationary pressures in the euro zone.Since the outbreak of the Russian-Ukrainian conflict, high inflation caused by rising energy and commodity prices has increasingly become a major problem for the economic development of the euro zone.Not only in Germany and Spain, but other euro zone economies have seen sharp rises in inflation.In March, the overall inflation rate in the euro zone has already hit the largest increase in history.
The high level of inflation has now affected the lives of Europeans.According to foreign media reports, although some countries in the euro zone have helped people fight inflation through one-time payments, fuel subsidies and higher minimum wages, these help measures are still difficult to fully offset the rising cost of living in the face of increasing high inflation.According to estimates by foreign institutions and economists, rising heating and electricity costs, as well as rising fuel prices, will increase household spending in the euro zone by about 230 billion euros this year.
The continued rise in inflation levels has put pressure on the European Central Bank to increase sharply.European Central Bank President Christine Lagarde recently revealed that the euro zone economy is currently facing multiple pressures and challenges such as soaring inflation and slowing growth, and the ECB needs to adjust the existing loose monetary policy.She expects the ECB to start raising interest rates for the first time in more than a decade in July and may bid farewell to an eight-year era of negative interest rates before the end of the third quarter.
In the face of common inflationary pressures, the European Central Bank's internal views on exiting the easing policy are becoming more and more unified, and the pace of the European Central Bank's interest rate hikes has become the general trend.
French central bank governor Villeroy pointed out that the current high inflation in the euro zone has almost far exceeded the expected inflation warning line of the European Central Bank, and the European Central Bank must give priority to high inflation in the short term.Bundesbank President Joachim Nagel also believes that the current high level of inflation in Europe, exiting the negative interest rate range is "the right step forward" and will help reduce uncertainty in financial markets.(Finish)
【Editor: Cheng Chunyu】
