Eurozone inflation surges to record high in March
Eurozone inflation surged to a record 7.5% in March amid rising energy prices, according to preliminary data released by Eurostat on Friday.
Annual inflation increased from 5.9%, coming in well above the 6.6% expected and driven by rising energy and food prices. Energy inflation jumped to 44.7% in March from 32% the month before, while food, alcohol and tobacco inflation rose to 5% from 4.2%.
Core inflation, which strips out volatile components of food and energy, increased to 3.2% from 2.8%.
Jack Allen-Reynolds, senior Europe economist at Capital Economics, said: "With euro-zone inflation rising even further above the ECB’s forecast, and likely to remain very high for the rest of the year, we think it won’t be long before the Bank starts raising interest rates."
Capital Economics now expects headline inflation to average around 6.5% this year, and said the risks lie to the upside.
"As a result, we think that the ECB will soon conclude that it can’t wait any longer before starting to raise interest rates. We have pencilled in three 25bp rate hikes for this year."