FRANKFURT (MNI) – Energy prices and indirect taxes are expected to
continue applying upward price pressures in the Eurozone in short term,
the European Central Bank said in its Monthly Bulletin published on
Thursday.
Noting the strong jump in oil from January to February, as well as
the rise in futures contracts, the central bank said that energy price
inflation likely increased last month. In January, energy price
inflation reached 3.0% on the month, boosting the annual rise to 12.0%.
“Although base effects will exert some downward pressure on energy
inflation, particularly in March and April, it is likely to remain at a
high level for some time,” the ECB said. “In addition, the effects of
past increases in oil prices are still pending and are likely to impact
on consumer prices in the coming months.”
Turning to recent fiscal policy adjustments, the central bank
projected that the increase in indirect taxes that have been announced
or that have already been implemented will continue to underpin Eurozone
inflation this year, with their contribution to the annual figure
possibly even stronger than in 2010.
“Given the scale of the current fiscal imbalances in several euro
area countries, the extent to which changes in indirect taxes play a
role in related fiscal consolidation adjustment needs will continue to
pose upside risks to euro area HICP inflation,” the bulletin read.
“Despite the benefits achieved through adjustments to the
expenditure side of governments balance sheets, some adjustment to
indirect taxes remains quite likely,” the ECB continued. “Consequently,
the implementation of such measures needs to be monitored closely in
order to assess their potential impact on euro area inflation
developments.”
— Frankfurt bureau: +49 69 720 142; email: frankfurt@marketnews.com —
[TOPICS: MT$$$$,M$X$$$,M$$EC$]
