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Inflation rise hurts growth, euro zone ministers concerned

© Reuters. FILE PHOTO: Irish Finance Minister Paschal Donohoe presents Budget 2020 at Government Buildings in Dublin, Ireland October 8, 2019. REUTERS/Lorraine O’Sullivan

BRUSSELS (Reuters) – The surge in inflation is hurting growth in the euro one and finance ministers are naturally concerned, the chairman of the ministers Paschal Donohoe told the European Parliament’s economic committee on Wednesday.

Euro zone inflation rose to a new record high of 5.1% year-on-year in December, defying expectations for a big drop and adding to already copious doubts that price pressures are as benign and temporary as the European Central Bank still expects.

Donohoe said he was confident the European Central Bank would do all it can to curb price growth, but that it could not solve problems with supply, which were behind much of the price rises.

He also said that it would be reasonable to expect that euro zone governments will provide less fiscal support to their economic in 2023 than now as economic recovery was strengthening.

He also noted that ministers would be careful not to create cliff-edge effects and that country-specific circumstances would be taken into account when deciding on a euro zone-wide fiscal stance.

Inflation rise hurts growth, euro zone ministers concerned

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