Inflation in the Euro zone soared to almost four times the European Central Bank’s target, registering at a record 7.5 per cent last month.
European countries faced the prospect of slowing growth and rising costs, with the war in Ukraine continuing to put renewed pressure on gas and energy prices.
The EU’s package of sanctions on Russia has also led to repercussions from the Kremlin, including a new directive from Vladimir Putin that fuel must be bought in roubles, amid threats of turning off the tap.
The threat of stagflation looms, with consumer price growth up across the 19 members of the bloc using the currency, from just under six per cent in February, to more than six-and-a-half per cent for March.
Food prices and supply chain pressures also contributed to the rise in inflation, which is above the European Central Bank’s two per cent target, now at seven-and-a-half per cent.
According to Reuters, underlying prices, which exclude fuel costs, also shot up to 3.2 per cent, from 2.9 per cent, which suggests that reversing the latest trend of inflation may difficult even if pressures on supply chains owing to rising energy costs subside.
While growth was estimated to have been positive in the first quarter, the second is likely to be nearer zero as consumption and investment looks set to drop.
The ECB may try to tighten its grip on inflation by raising interest rates, though it is expected to be by a small amount.