Rising inflation is hurting growth in the eurozone and finance ministers are naturally concerned, Prime Minister Paschal Donohoe told the European Parliament’s economic committee on Wednesday.
Euro zone inflation rose to a new record high of 5.1% year-on-year in December, defying expectations of a big drop and adding to doubts about whether price pressures are as benign and transitory as the European Central Bank still forecasts (ECB).
“The rise in inflation is affecting growth and the purchasing power of citizens’ income. This is something that naturally worries finance ministers”, he stated donohoe.
“The narrative on inflation has also changed a bit, as the factors that have been driving prices higher are taking longer to dissipate than expected. We talked mainly about energy prices, but also about strong demand, supply bottlenecks and technical factors.“, He said.
Donohoe indicated that he was confident that the ECBwhich intends to keep inflation at 2% in the medium term, would do everything possible to curb price growth, but could not solve the problems of supply, which were behind a large part of the price increases.
“So far there are no signs of significant second-round effects from wage increases, with inflation expected to start to decline this year and subsequently fall below the ECB’s 2% target in 2023.“, he pointed.
He also said that governments were taking or exploring measures against the negative impact of high energy prices, but growing tensions with Russia, which supplies 40% of the world’s gas EUare also a factor in the outlook for energy prices and general inflation.
“Geopolitical tension must of course also be taken into account in this context.Donohoe said.
Source: Gestion
Ricardo is a renowned author and journalist, known for his exceptional writing on top-news stories. He currently works as a writer at the 247 News Agency, where he is known for his ability to deliver breaking news and insightful analysis on the most pressing issues of the day.
