Eurozone inflation 'close to peak': ECB vice-president

A surge in eurozone consumer prices, propelled even higher by Russia's invasion of Ukraine, is "very close" to reaching its peak, European Central Bank (ECB) vice-president Luis de Guindos said on Thursday (Apr 28).

Eurozone inflation soared to 7.4 per cent in March, an all-time high for the currency club and well above the ECB's 2-per cent target.

"My assessment is that we're very close to the peak, and that we'll start to see inflation decline in the second half of the year," de Guindos told a committee of the European Parliament.

"Nevertheless, inflation will be high even in the last quarter," de Guindos said, with the ECB currently projecting a figure of 4 per cent for the last 3 months of 2022.

The bank expects inflation in the eurozone to even out at 5.1 per cent over 2022.

The estimate reflected a "baseline" scenario, not taking into account the possibility of a stop to Russian gas supplies, which would have severe consequences for the European economy.

In such a scenario, the cost of energy would rise higher, driving inflation up to 7.1 per cent, the ECB predicted in March.

The Frankfurt-based institution expects the shift to other power suppliers to slowly take the pressure off energy prices.

The ECB would continue to follow "second-round effects" that could push up wages, and further boost inflation, de Guindos said.

"So far we have not seen this kind of wage dynamics," the ECB vice-president said.

"Wage increases are quite prudent and fully compatible with the target of price stability." AFP