Inflation in Europe is running at its highest level ever, turning up the dial on the European Central Bank to rein in ultra-stimulative policy, reveals official figures released today.
Prices are 5.1 per cent higher than they were a year ago in January, the hottest rate of inflation in the area of countries using the Euro since records began.
Economists had expected Eurozone inflation to drop to 4.4 per cent from December’s five per cent reading.
The record print will pile pressure on the European Central Bank (ECB) to act at its policy meeting tomorrow to get a hold of the soaring cost of living in the bloc.
The ECB has held firm in its commitment to keep monetary policy extremely loose, running against signals from the US Federal Reserve and the Bank of England that they are intending to launch a rapid rate hike cycle this year to tame inflation.
Holger Schmieding, chief economist at Berenberg Bank, said: “Inflation continues to surprise to the upside.”
“Against this backdrop the debate at the ECB will likely become even more controversial than before,” he added.
ECB President Christine Lagarde has said at previous meetings that a rate hike this year from the central bank is unlikely.
Interest rates in the Eurozone are currently at historic lows, however, markets are pricing in around two two hikes from the ECB this year.