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Wednesday, Sep 03, 2025

Cost of living in Europe smashes all-time high

Cost of living in Europe smashes all-time high

EU forced to admit that price hikes are not as temporary and benign as previously said
Inflation across the Eurozone surged to 5.1% in January from 5% in the previous month, despite optimistic expectations for a sharp drop to 4.4%, data from Eurostat showed on Wednesday. Inflation is now more than twice the ECB’s 2% target.

The latest growth reportedly reflects the hottest rate of inflation across the 19 countries that have shared the euro since the records began.

Meanwhile, the single currency jumped by 0.3% to $1.13050, touching a one-week high to the US dollar, on the expectation that the ECB would signal a faster path for policy tightening as early as Thursday.

The ECB’s Governing Council is scheduled to gather this week, with an announcement due on Thursday afternoon. The soaring cost of living in Europe is putting pressure on the regulator to tighten money printing.

The ECB is expected to decide whether to keep implementing extremely loose monetary policy or keep running against signals from the US Federal Reserve and the Bank of England that they are planning to launch a rapid rate hike cycle this year to tame the inflation growth.

ECB President Christine Lagarde had previously signaled that a rate hike was unlikely in 2022. Interest rates in the Eurozone are currently at historic lows, however, markets are pricing in around two hikes from the regulator this year.
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