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French and Italian inflation accelerated to the highest levels in about a decade as households in two of the euro area's biggest economies faced a jump in the cost of energy.
Consumer prices in France rose 2.7% from a year earlier, while in Italy, the number increased to 3%. Those readings come ahead of data for Germany and the euro area that are forecast to show similarly sharp accelerations.
The increases were almost all down to an increase in energy prices, which rose 14.4% in France and 20.5% in Italy.
The world's central banks have played down the significance of the recent surge in inflation that is hitting most advanced economies. European Central Bank President Christine Lagarde said Wednesday that stronger inflation is “largely transitory,” echoing comments made by Federal Reserve Chair Jerome Powell, who said there will be an end to the pressures of a reopening economy.
Bank of France Governor Francois Villeroy de Galhau has been equally sanguine, saying earlier this week that while tensions on some prices are undeniable, these are temporary and associated with the strong economic recovery in Europe.
| What Bloomberg Economics Says... |
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“The pattern of contributions to French inflation is in line with expectations, which should offer some reassurance to the ECB that the rapid run up in euro-area prices will prove largely transitory.” --Maeva Cousin, senior euro-area economist. Read the full REACT |
With just over 6 months to go until French elections, Emmanuel Macron's government is wary of a public backlash against high prices similar to the Yellow Vest movement, which began as a protest against high fuel costs.
European governments have pledged to spend billions to mitigate the rise in energy prices for the continent's poorest households. Italy plans to earmark about 3.5 billion euros ($4 billion) to protect consumers from that surge. In France, Prime Minister Jean Castex is due to speak on prime time television news Thursday to detail the support.
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