Inflation across the 19-country eurozone is running above the European Central Bank's target for the first time in four years, largely on the back of higher oil prices, official figures showed Thursday.
Eurostat, the European Union's statistics agency, found that consumer prices across the eurozone were 2 percent higher in the year through February. That was up from the 1.8 percent recorded the previous month but roughly in line with market expectations.
Inflation is running ahead of the ECB's target of just below 2 percent for the first time since January 2013.
However, the increase is unlikely to prompt the ECB to ease up on its monetary stimulus soon as underlying price increases remain subdued. The core inflation rate, which strips out the potentially volatile items of food, energy, alcohol and tobacco, was unchanged at 0.9 percent in February. It's stubbornly stayed there since December, during which time the headline rate has nearly doubled from 1.1 percent.
Energy prices, according to Eurostat, were a massive 9.2 percent higher in February than the year before. That's largely due to the near doubling of oil prices in the past year as oil producers have scaled back output and fears of a slump in demand, most notably in China, have abated.
The upward push on inflation by energy prices is equivalent to the drag they were having over the past couple of years, when oil prices tanked from around $100 a barrel to below $30. During that time, inflation across the eurozone sank and at several times, consumer prices were actually falling — a phenomenon known as deflation that can hurt an economy as consumers put off purchases in the expectation of lower prices ahead and firms grow reluctant to innovate and invest.
It was that deflation threat that prompted the ECB to slash interest rates and enact a big bond-buying program. It hoped the stimulus efforts would stoke inflation by promoting economic growth.
Though underlying inflation remains benign, there have been clear signs that the eurozone economy picked up steam in recent months. And surveys point to faster growth to come.
Unemployment has also fallen steadily. Figures released Thursday by Eurostat showed unemployment across the eurozone held at 9.6 percent in January, its lowest level since May 2009. The figure masks the fact that the number of unemployed people fell by another 56,000 during the month.
