Following Germany's post-Weimar record high inflation print, the European Union's consumer price inflation data this morning surged to a record high at +8.1% YoY (notably hotter than the +7.8% YoY expected).
The inflation impulses are broad based across all the major European nations…
The surge in European inflation is dominated by energy prices rising, and food costs…
Finally, we note that the recently agreed EU import ban on a major portion of Russian oil, meanwhile, risks further stoking pressure on prices.
The report comes just 10 days before a crucial ECB meeting where officials are set to announce the conclusion of large-scale asset purchases and confirm plans to raise interest rates in July for the first time in more than a decade.
“Inflation is an enormous economic risk,” German Finance Minister Christian Lindner told a news conference in Berlin.
“We must fight it so that no economic crisis results and a spiral takes hold in which inflation feeds off itself.”
Don't look now, but the market's expecting the ECB to raise rates by the same amount as the Fed over the next year! pic.twitter.com/k0ouYghlTI
— Rishi Mishra (@aRishisays) May 30, 2022
President Christine Lagarde indicated last week that quarter-point increases are likely at meetings in July and September.
As Bloomberg reports, Chief economist Philip Lanebacked that timeline on Monday, calling moves of that size a “benchmark pace” in exiting stimulus, which also includes large-scale bond-buying.
Some officials have floated the idea of hiking by a half-point for the first time in the ECB’s history — mirroring the latest Federal Reserve decision. Dutch Governing Council member Klaas Knot has said inflation numbers for May and June will determine whether such a step is warranted.
Get back to work Mrs. Largarde!