[ad_1]
Some of the inflationary pressure can be attributed to governments abandoning measures such as price controls and subsidies that have softened the impact of rising energy prices on households. In France, electricity prices for some consumers were allowed to rise in February after freezing.
The recovery of production in China may also lead to higher prices. China’s gigantic manufacturing capacity, combined with its leading role in the global supply chain, is having a huge impact on the global economy, for example by boosting energy demand.
Analysts, however, are divided over whether increased production will ease price pressures by expanding supply, or increase consumer spending by finally making long-awaited goods available.
Some economists and policymakers pay particular attention to core inflation because it measures whether inflation is spreading through the economy as a whole.
Companies continue to raise prices sharply in some sectors. Some analysts also fear that pressure from workers to raise wages could further fuel inflation this year.
While inflation is well below its October peak, it is still well above the European Central Bank’s 2 percent target. Christine Lagarde, the bank’s president, said a half-point rate hike this month is almost inevitable. In an interview earlier this week, she added that the bank would continue to raise rates if needed to meet inflation targets.
Eswar Prasad, professor of trade policy at Cornell University, said rising interest rates are placing an unwelcome financial burden on governments already struggling with huge public debt.
He added that “the latest inflation data and likely policy actions are worsening the eurozone growth outlook for 2023, which improved slightly at the beginning of the year.”
[ad_2]
