Food price inflation will begin to decline in the second half of 2023 as crop prices ease, Francois Villeroy de Galau, a member of the European Central Bank’s Governing Council, said on Tuesday, as quoted by Reuters and Agerpres.

The ECB will manage to bring inflation down to around 2% by 2025, a French official assured in an interview with RTL.

Analysts expect the ECB to raise interest rates as much as possible at its May 4 meeting to keep inflation under control. The sources, who spoke on condition of anonymity, told Reuters that ECB officials were in favor of raising the interest rate by 25 basis points.

In his annual report to French President Emmanuel Macron, Villeroy said the ECB was justified in further tightening monetary policy as there were no signs that inflationary pressures were easing.

And ECB President Christine Lagarde recently estimated that inflation in the Eurozone is too high, and the monetary policy of the European Central Bank should be aimed at returning it to the 2% target.

“Our monetary policy should obviously use all tools in practice to return inflation to the medium-term goal of 2%. This exercise is ongoing. We have already used most of the tools, we still have a little more to do,” the head of the ECB said.

The official added that “the time required will obviously depend on a number of factors and the significant impact on credit and its availability after the financial challenges we have faced”, referring to the recent turmoil in the banking sector.

What do the latest inflation data show?

The latest Eurostat data show that the annual inflation rate in the Eurozone fell from 8.5% in February to 6.9% in March. By contrast, core inflation, which remains after stripping out prices of non-volatile goods such as energy and food, continued to rise to 7.5% from 7.4% in February.

Another indicator, which in addition to energy and food prices also excludes cigarette and alcohol prices, rose to 5.7% from 5.6% in February.

Core inflation is a measure that the ECB watches closely when developing its monetary policy decisions.

The ECB’s main concern is that services inflation, which in the case of the eurozone reached 5.1%, is too high and could signal that wages are becoming a major issue, given that the prices of services are largely determined by labor costs.

Another concern of the ECB is that food inflation continues to accelerate and has a huge impact on consumer perceptions of inflation, which could change consumer behavior and trigger calls for higher wages.

In its latest forecasts, the ECB expects inflation in the euro area to be 6.3% in 2023 and 3.4% in 2024.