The cost of living continues to surge in the euro zone which raises questions about how the ECB can stablilize the increasing consumer prices. On an annual basis, the Inflation cam in at 7.5% for March. This rate was published with the preliminary data from Europe’s statistics office.
Last month, tht headline Inflation reached 5.9% in February. The economist also say that the Russia’s invasion of Ukraine has caused economic uncertainty which made the number rise. They also wonder whether the euro zone will enter into economic downfall in 2022. When questioned about this to the authorities they refused to give a proper response. Mario Draghi, Italy’s Prime Minister said that there will be economic damage but there will not a be a economic downfall.
The euro zone has taken extra-ordinary measures to avenge Russia for its decision to invade Ukraine like stopping the sales of luxury items and these boycotts can affect the euro zone economy. The other side effects of the Russia-Ukraine war was surging energy prices which was taking the Inflation to the next level.
Christine Lagarde, President of ECB said that there are three main factors that contribute to the surging of Inflation. She also said that the engry prices will continue to stay higher for a longer period of time, the pressure of food Inflation is also expected to increase and the congestion in the manufacturing sector is also expected to continue on few sectors. he economic situation has made the consumers cynical about them increasing their wealth. Households also continue to be more distrustful about the economy and are cutting down the unnecessary spendings.