THE EU’s statistics agency revised upwards its March inflation reading for the euro zone yesterday, adding to the case for the European Central Bank to hold back from further monetary stimulus.
Costlier oil pushed consumer prices higher.
Prices in the 17 nations sharing the euro were up 2.7 per cent in March from a year ago, Eurostat said, the same level as in February but up from a first estimate for March of 2.6 per cent.
Brent crude prices are near $120 a barrel, hitting prices at a time when a depressed economy with rising unemployment, government cuts and weak business confidence has eaten into consumers’ ability to spend. That and the return to debt crisis mode in Spain and Italy have prompted speculation that the ECB could do more to stimulate growth. But high headline inflation numbers to some extent tie the bank’s hands.
“Higher energy prices and increases in indirect taxes may keep inflation above the ECB’s target in the remainder of this year,” said Martin van Vliet, an economist at ING, referring to planned increases in value-added taxes in Italy and France.
Energy accounted for about 0.6 percentage points of the euro zone’s inflation in March. Without that rise, consumer prices would be around the ECB’s target of below, but close to 2 per cent.
Underlining the impact of oil prices, inflation in non-euro zone Britain also rose in March from February. – (Reuters)
