Inflation in Europe hit a record high of 5% in December, ratcheting up pressure on the European Central Bank (ECB) to begin raising interest rates.
Preliminary data showed that the headline inflation rate came in at 5% for the final month of 2021 compared to December 2021. The figure represents the highest ever on record and follows November’s previous all-time high of 4.9%.
The December increase in inflation was mostly due to higher energy prices.
Inflation has been in the spotlight after consecutive increases in recent months, with money managers debating whether the ECB should be taking a more aggressive stance to combat rising consumer prices.
The central bank said last month that it would be cutting its monthly asset purchases but vowed to continue its unprecedented level of stimulus in 2022. Its forecasts, updated in December, put headline inflation at 1.8% in both 2023 and 2024. It expects the rate to overshoot the bank’s target in 2022, however, coming in at 3.2%.
Economists argue that the pandemic and inflation are among the biggest risks for economic performance in 2022 and are calling on the ECB to begin raising interest rates.
The Euro currency was up 0.2% against the U.S. dollar in European trading today (January 7) at around $1.131.
