Unexpected growth showed inflation V France and to Spaincreating confusion while lately elements are all over Eurozone tended to lower prices. Following the publication of consumer price indices in the eurozone’s second and fourth largest economies, traders in the international capital markets are now betting that European Central Bank it will need to raise interest rates even further to bring prices under control, even assuming that the value of money in the eurozone could rise to 4% for the first time in the history of the euro. In particular, inflation in France strengthened to a record 7.2% in February on the back of rising prices for food and services. In Spain, it was 6.1% in the same month. Analysts had expected inflation to remain flat at 7% in France in February and slow down in Spain. moneyreview.gr And Bloomberg.

Stronger-than-expected price data make the 50 basis point rate hike the ECB is expected to make at its meeting in March clear and reinforce calls for even bigger steps to bring prices under control. Brokers have begun betting that the ECB interest rate will eventually be set higher than the 3.5% they forecast at the beginning of the year. The ECB deposit rate is currently 2.5% and has never been raised above 4%. But apart from the ECB, unexpectedly high inflation is also a headache for politicians, even if the figures in France and Spain are among the lowest in the eurozone.

In France, the highest rise in consumer prices in a generation is becoming a growing concern for President Emmanuel Macron, who is already facing a major backlash against his pension plan. The French government spent huge sums last year to cushion the initial energy shock, but pressure on public finances has forced it to scale back some support measures. And at the same time, inflation spreads to goods and services where the government has less room to intervene. In Spain, finally, Prime Minister Pedro Sanchez’s government is under pressure to keep prices under control in an election year.