BRUSSELS: Eurozone consumer prices made a huge leap in January, official data showed Wednesday, but experts warned the rise was due to one-off changes and that underlying inflation is still low.
The figure came in largely on the impetus of Germany, where new taxes played a factor in seeing consumer prices rise for the first time since last summer. France and Spain also saw consumer prices flip into positive territory, although analysts say the extraordinary circumstances of the Covid-19 pandemic make inflation difficult to measure. The Eurostat agency said inflation in the 19 countries that use the euro hit 0.9 percent at the start of 2021, a steep 1.2 percent leap from only a month earlier.
The closely watched core inflation rate, which strips out highly fluctuating prices such as energy and food, also jumped, reaching 1.4 percent, Eurostat said.
Despite the leap, inflation in Europe remains from the European Central Bank target of just under two percent. The historic rise “owes largely to one-offs,” said economist Florian Hense, of Berenberg Bank.
For now, salvaging an economy that crashed by 6.8 percent in 2020 is the priority. To fight the slump in demand and boost prices, the European Central Bank has bolstered its emergency pandemic bond-buying programme to 1.85 trillion euros ($2.24 trillion).
Experts agreed that the fresh data had little chance of reversing the aid from the Frankfurt-based institution.
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