The ECB does not expect a sharp rise in prices in the euro area

Despite the latest rise in the cost of living in the euro area, upward pressure on prices remains somewhat subdued. This was stated on Thursday by the chief economist of the European Central Bank (ECB) Philip Lane. According to him, a sustainable turnaround in inflation dynamics is currently not visible. "The medium-term outlook for inflation remains cautious," the economist wrote in a blog published on the ECB's website. He added that demand is still weak, and there is still a lot to catch up on the labor market and production markets. According to the ECB, consumer prices in the monetary union should grow at an average annual rate of just below two percent. This value is considered by monetary policy makers to be optimal for maintaining price stability. In March, inflation in the euro area rose by 1.3 percent. Energy prices in particular have risen sharply. Back in February, the inflation rate was 0.9 percent. Experts predict that the rise in prices will continue in the coming months, mainly due to the coronavirus crisis, which caused the comparison base last year to be low. According to Lane, the economic situation will continue to be characterized by high uncertainty in the near future due to "the race between the launch of vaccination campaigns and the spread of the virus," the economist explained. The prolongation of the pandemic measures in the second quarter will leave traces of economic activity after gross domestic product (GDP) is likely to decline in the first quarter, Lane added.