FRANKFURT (Reuters) - Euro zone inflation rose to a new record high last month, defying expectations for a big drop and piling pressure on the European Central Bank to finally admit that price growth is not as temporary and benign as it has long predicted.
Inflation across the 19 countries that share the euro picked up to 5.1% in January from 5% in December, far outpacing expectations in a Reuters poll of analysts for a drop to 4.4%, data from Eurostat showed on Wednesday.
The reading reflected soaring energy prices as expected but unprocessed food inflation also jumped more than 5%, a potential source of political pressure on the ECB as fuel and food prices impact ordinary voters quickly.
Inflation is now more than twice the ECB’s 2% target.
The central bank, which will hold a policy meeting on Thursday, has for months shrugged off data showing prices climbing, arguing that temporary factors are behind the rise and inflation will abate soon on its own.
But the ECB’s track record in forecasting inflation is patchy. It predicted a peak first in November then December, and was forced several times last year to sharply raise its projections.
Inflation excluding food and fuel prices, closely watched by the ECB, slowed to 2.5% from 2.7% while a narrower measure that also excludes alcohol and tobacco products slowed to 2.3% from 2.6%. Both figures were well above expectations.