Early estimates for April eurozone inflation came out ahead of expectations, with the region’s CPI rising to 2.8%, according to Eurostat.
More alarming, it’s all about the continent’s biggest economic powers, and we don’t just mean Germany. Inflation picked up in Spain and Italy, two of the eurozone’s biggest economies, rising 0.2% to 3.5% and 3.0%, respectively.
Those high numbers are troubling for a couple of reasons. One, it’s likely to encourage ECB President Jean-Claude Trichet and the rest of the board to raise rates again, as soon as May, but more likely in June.
Second, it’s a pretty clear indication that Spain and Italy are suffering on multiple fronts. Not only are prices increasing, but growth is anemic, and unemployment is high. How long these government’s can sustain austerity programs under such conditions remains to be seen.
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