The Eurozone inflation rate rose to 5% in December, setting a new high since the creation of the single currency more than 20 years ago, and has raised doubts about the speed at which price pressures will ease this year.

Driven by soaring energy and food prices, the Eurozone’s annual price growth-as measured by the unified consumer price index-exceeded the expectations of economists surveyed by Reuters, who forecast an average increase of 4.7%, which is slightly lower 4.9% November percentage.

The unexpected increase may put pressure on the European Central Bank to reduce monetary stimulus measures faster than planned. Although most economists expect inflation to fall from January, inflation is expected to remain above the ECB’s 2% target for most of this year.

Carsten Brzeski, head of global macro research at ING, said: “This should be the peak, but overall inflation will remain high at least until the end of summer, especially when higher wholesale energy prices are passed on to retail consumers and other economic sectors.” “Some corporate customers have told us that they will increase prices during 2022.”

As the Eurozone economy rebounded from the impact of the pandemic, activity restrictions have been lifted and supply has struggled to keep up with demand, leading to a sharp rise in inflation in recent months Energy cost And caused a shortage of many materials.

Eurostat Say Driven by accelerated increases in the prices of food, alcohol, tobacco and other commodities, prices rose 0.4% from the previous month. Energy prices rose 26% from the same period last year, a slight slowdown from the previous month.

Excluding the volatile energy and food prices, the core inflation rate stabilized at 2.6%.

Most economists expect Eurozone inflation to begin to decline in the next few months, as the impact of temporary sales tax cuts caused by the German pandemic disappeared from the data, energy prices stabilized and global supply chain bottlenecks eased.

However, the wholesale price of natural gas in Europe almost doubled on Christmas Eve, hitting a record high, and rising again this week after Russia’s supply slowed. Supply chain bottlenecks continue to cause delays and higher costs for manufacturers, pushing up the prices of many consumer products.

“In Spain, and to a lesser extent Italy, soaring wholesale costs are quickly passed on to retail utility bills, although Government interventionIt was our main upside surprise in December,” said Jacob Nell, Morgan Stanley’s head of European economics.

The European Central Bank responded to concerns about rapid price increases last month, saying that its 185 million euro pandemic response bond purchase plan will stop net purchases in March as part of a “gradual” reduction in quantitative easing.

The central bank also significantly raised the euro zone inflation forecast to 2.6% and 3.2% in 2021 and 2022, and also expects to fall back to the target of less than 2% next year.

Investors continue to bet that high inflation will force the European Central Bank to start raising interest rates from extremely low levels earlier than expected. Currency market futures price the European Central Bank’s October deposit interest rate increased by 0.1 percentage point.

Jack Allen Reynolds, senior European economist at Capital Investment Macros, said that Eurozone inflation may remain above 2% “at least until the fourth quarter”, and predicts that the European Central Bank will therefore “be ready to tighten monetary policy.” 2023″.