OPINION
Market Rating Before FOMC MeetingJan 31
Euro Area Inflation set a new record
According to flash estimate released today by Eurostat, Euro Area annual inflation is expected to be 5.8% in February 2022, up from 5.1% in January.
Among the components of the data, energy is expected to have the highest rate in February by 31.7%, followed by food, alcohol & tobacco by 4.1%, non-energy industrial goods by 3.0%, and services by 2.5% on annual basis.
Inflation rates (%) measured by the HICP Show that Lithuania is at the top of the table by 13.9%. Estonia (12.4%), Belgium (9.6%), and Latvia (8.9%) became the second, third and fourth among Euro Area countries, respectively. The countries with the lowest inflation rate are Portugal (4.4%), Malta and Finland (both 4.3%), and France (4.1%).
Due to the ongoing tensions between Russia and Ukraine and invasion of Ukraine by Russian forces, we see bullish price moves in energy instruments, especially crude oil and natural gas, and these moves are the main determining factor in Euro Area inflation.
On the other hand, the upward pressure of accumulated demand after the pandemic has weakened and the weak course of euro in the markets has an effect on the services sector. Globally, supply bottlenecks and supply chain disruptions continue as the pandemic has not over yet. And price pressure created by the Ukraine crisis through energy indicates that the peak in Eurozone inflation has not yet been reached.
Among the components of the data, energy is expected to have the highest rate in February by 31.7%, followed by food, alcohol & tobacco by 4.1%, non-energy industrial goods by 3.0%, and services by 2.5% on annual basis.
Inflation rates (%) measured by the HICP Show that Lithuania is at the top of the table by 13.9%. Estonia (12.4%), Belgium (9.6%), and Latvia (8.9%) became the second, third and fourth among Euro Area countries, respectively. The countries with the lowest inflation rate are Portugal (4.4%), Malta and Finland (both 4.3%), and France (4.1%).
Due to the ongoing tensions between Russia and Ukraine and invasion of Ukraine by Russian forces, we see bullish price moves in energy instruments, especially crude oil and natural gas, and these moves are the main determining factor in Euro Area inflation.
On the other hand, the upward pressure of accumulated demand after the pandemic has weakened and the weak course of euro in the markets has an effect on the services sector. Globally, supply bottlenecks and supply chain disruptions continue as the pandemic has not over yet. And price pressure created by the Ukraine crisis through energy indicates that the peak in Eurozone inflation has not yet been reached.
