Euro-zone consumer inflation jumped in January to an estimated 2.5 per cent from 2.1 per cent in December, data showed yesterday, but the European Commission said it would be wrong to blame the changeover to euro cash.
The rise in the annual rate "cannot necessarily be taken as evidence of a significant euro changeover effect when all the other possible influences . . . are taken into account", the Commission said in a statement.
European consumer groups believe retailers have used the exchange of the new notes and coins as an excuse to round up prices when the cash was rolled out in 12 nations on January 1st, a claim that officials have denied. The Consumers Association of Ireland (CAI) said the increase in euro-zone inflation would be attributed to the introduction of the single currency. "The increases seem to be in the services-related area, that seems to be the general suspicion across the board," said Mr Dermot Jewell, chief executive of the CAI.
The CAI is now surveying the price of a basket of basic grocery items before and after the launch of the euro but it will be another few weeks before it is completed.
The rise in inflation will harden opinion that the European Central Bank (ECB) will hold rates at 3.25 per cent when it meets next week.
However, January's inflation rise was a bit less than some expected after sharply higher data from Italy, Belgium and Germany, where the damage was mainly done by higher indirect taxes and a seasonal spike in food costs due to bad weather.
"This is very much below our expectations . . . 2.5 per cent means that this is much weaker than . . . data from Italy and Germany," said Mr Volker Nitsch at Bankgesellschaft in Berlin. He warned this meant the data might be revised upwards, because it looked as if the EU statistics agency Eurostat which produced them was counting on mild French numbers.
Observers will also have to wait until the end of the month for official consumer price data which might reveal something of the impact of the euro on prices in the Republic. The January inflation figures are not due for release by the CSO until February 28th. The ECB has already stressed that a spike in prices this month or next would not prevent inflation from heading under the Bank's 2 per cent policy ceiling in the next six months - and staying there for several years.
