The European Central Bank is determined to prevent higher energy and food prices from driving up inflation more broadly.
ECB president Jean-Claude Trichet has appealed to bosses, workers and companies not to raise wages and prices in response to higher inflation, as he explained in an interview with EuroNews: “It’s our responsibility to make sure that this inflation is just temporary and doesn’t spill over into the cost of living, and particularly that it doesn’t affect wage negotiations. Because then, we’d have what we call second round effects, leading to inflation which would be long lasting, instead of being temporary and related to higher costs for oil and raw materials.”
Questioned about the widening gap between the rich and the poor in Europe, Trichet said: “Who suffers most from inflation? Who suffers most from rising prices? It’s the poor, not the rich. The rich can protect themselves from inflation, poor people can’t. When we fight for price stability and against inflation, we’re doing something that is most important for the most underprivileged among us.”
Euro zone headline annual inflation recently hit 3.1% and Trichet said the region faced a “more protracted” period of elevated inflation than previously expected and the the ECB will act to curb it. He did not say if such action would include changes in interest rates, but added that their current level is correct.