Europes Getting Pricier

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What's going on?

According to data out on Thursday, prices in the eurozone in February rose at their fastest pace in four years (yep, were talking about inflation)!

What does this mean?

Compared to the year before, eurozone inflation prices by 2% in February. However, most of that was thanks to higher energy prices, which have increased by more than 9% since last year. But so-called core inflation, which measures inflation without volatile elements like energy prices, stood only at 0.9%.


A 2% inflation rate is notable because its just above the European Central Banks (ECB) target (whats that? click here). For years now, the ECB has been trying to promote economic growth through low interest rates that encourage people to borrow and spend more money. Higher inflation rates mean the ECB might stop being so accommodating but it might wait and see which way core inflation is moving before it starts to scale back its stimulus.

Why should I care?

For you personally: Your wallet might start to feel the pinch from higher prices.

Most of the jump in inflation had to do with energy prices, so dont be surprised by pricier travel and heating costs. Food prices also picked up by 2.5%, which means that your trips to the grocery store are getting a bit more expensive too.


The bigger picture: The jump in inflation masks some pretty big differences within the eurozone.

While inflation reached 2.0% for the eurozone as a whole in February, it was much higher in Germany, at 2.2%, than it was in weaker economies like Italy, where it was 1.5%. That means itll be tough for the ECB to keep interest rates low (since some countries like Italy arguably still need the help) and convince inflation hawks like Germany that its taking inflation seriously.

Originally posted as part of the Finimize daily email.

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