The most important events and reports on the economy, central banks and politics from the Dow Jones Newswires program
Eurozone inflation falls slightly in February – core inflation rises
Inflationary pressures in the euro area eased slightly in February, but picked up in the core components. According to Eurostat, consumer prices rose by 0.8 percent compared to the previous month and were 8.5 (January: 8.6) percent above the level of the same month last year. Economists polled by Dow Jones Newswires had forecast monthly price increases of 0.6 percent and annual inflation of 8.2 percent at the end of last week. However, given the rise in inflation rates in France, Spain and Germany, doubts about the correctness of this forecast had grown.
VP Bank: Rise in core inflation is alarm signal for ECB
According to Thomas Gitzel, chief economist at Liechtenstein’s VP Bank, the unexpected rise in euro area core inflation in February is an alarm signal for the European Central Bank (ECB). “The previous projections of the ECB economists envisage a core inflation rate of 4.2 percent in 2023. The new projections must be revised upwards – that is clear with today’s figures,” writes Gitzel in a comment. The ECB could be forced to catch up with the US Federal Reserve on interest rates. In February, core inflation in the euro zone rose from 5.3 to 5.6 percent.
Coba: Eurozone core inflation peaked in July
After the surprising increase in February, Commerzbank economist Christoph Weil expects that core inflation in the euro area will only reach its cyclical high in July. After that, it should only go back slowly, writes Weil in a comment. “In the meantime, companies are likely to have passed on a large part of the energy price-related increase in production costs to consumers. But now, with the sharp rise in wages, a new wave of inflation is imminent. This will drive up prices for services in particular,” explains Weil.
DWS sees ECB under “extreme pressure to act”
The ECB is under extreme pressure to act, says Ulrike Kastens, DWS economist for Europe. The rate of inflation in the euro zone disappointed in February 2023. Contrary to market expectations, it only fell to 8.5 percent in February from 8.6 percent in January. While energy prices contributed some relief for the third straight month, food prices continued to climb.
Eurozone unemployment rate stable at 6.6 percent in January
Unemployment in the euro zone was stable in January despite a weakening economy. As reported by the European statistics authority Eurostat, the unemployment rate remained at the previous month’s level of 6.6 percent. Economists polled by Dow Jones Newswires had forecast a rate of 6.6 percent.
Scholz: Ukraine will be supported as long as it is necessary
In a government statement in the Bundestag, Chancellor Olaf Scholz (SPD) promised Ukraine further support “as long as it is necessary” and in Germany a “change of lane” for the development of a stronger one defense industry required. He called on China to stop selling arms to Russia. “Russia is still counting on a military victory, but there will be no such victory,” he stressed. A “dictated peace” against the will of the Ukrainians is not only out of the question for moral reasons, but also in the interest of security. “If Ukraine were to stop defending itself, it would not be peace, it would be the end of Ukraine,” Scholz warned.
Lindner: The economic turning point has only just begun
Federal Finance Minister Christian Lindner (FDP) has called for more determination in dealing with the economic consequences of the Ukraine war. “The turning point changes a lot, our support for Ukraine remains,” explained Lindner via the short message service Twitter. “However, the economic consequences for us are underestimated. The economic turning point has only just begun.”
Blinken urges Russia to extend grain deal
US Secretary of State Antony Blinken has called on Russia to extend the UN negotiated agreement on the export of Ukrainian grain. “There is a need for the G20 to work to extend and expand the Grains Initiative to strengthen food security for the most vulnerable,” Blinken said at a meeting of G20 foreign ministers in New Delhi. Blinken accused Russia of “deliberately and systematically” slowing down the pace of inspections of grain export ships. This has caused a backlog of ships “that could deliver food to the world today”. The agreement on exporting Ukrainian grain expires on March 18.
Russia denounces incursion by “saboteurs” from Ukraine
Russia has denounced an incursion by “saboteurs” from Ukraine and spoke of a “terrorist attack”. “Measures were taken to destroy the terrorists,” Kremlin spokesman Dmitry Peskov said in Moscow. president Wladimir Putin will be “continuously” informed about the development of the situation. He emphasized: “We are talking about a terrorist attack”. Russian authorities and the FSB secret service had previously reported that a group of Ukrainian “saboteurs” had entered the Briansk region on the Ukrainian border. The Russian army is trying to “eliminate” the “saboteurs”.
Kiev calls Russian saboteur allegations “deliberate provocation”
Ukraine has dismissed Russian accusations of incursion by Ukrainian “saboteurs” into Russian territory as a “deliberate provocation” from Moscow. “The story about a sabotage group in Russia is a classic deliberate provocation,” Ukrainian presidential adviser Mikhail Podoliak said on Twitter. “Russia wants to scare its people to justify its attack on another country and growing poverty after a year of war,” he added.
EU Commission extends examination of German lignite phase-out plans
The European Commission has widened its scrutiny of Germany’s plans to compensate lignite-fired power plant operators for the early phase-out. The reason given by the Commission was the change in the agreement between the Federal Republic of Germany and the energy company RWE from December last year on the accelerated phase-out of lignite in the Rhineland.
+++ economic data +++
Italy/Consumer Prices Feb pre +0.3% mom, +9.2% yoy
Brazil GDP 4Q +1.9% yoy
Brazil GDP 4Q -0.2% qoq
DJG/DJN/AFP/apo
(END) Dow Jones Newswires
March 02, 2023 07:30 ET (12:30 GMT)