Lagarde warns prices are skyrocketing due to Ukraine war

Frankfurt, Germany, Apr 14 (EFE).- The president of the European Central Bank, Christine Lagarde, warned on Thursday that prices are soaring due to the war in Ukraine.

During a virtual press conference, Lagarde said prices had gone up in many sectors due to a rise in the cost of energy caused by the Russian invasion of Ukraine.

According to ECB forecasts, the rise in prices could also mean a rise in wages, which at the moment remain contained.

Lagarde told reporters that ECB debt purchases will likely end in the third quarter of the year due to the sharp rise in inflation, but did not specify the exact month.

“Inflation has increased significantly and will stay high over the coming months” because of the energy situation, the ECB predicts.

The next macroeconomic, inflation and growth projections for June will allow the Governing Council to decide when to conclude debt purchases.

Inflation in the eurozone went from 5.9% in February to 7.5% in March and energy prices since the start of the war in Ukraine have risen by 45% compared to last year; the main cause of inflation in the region, highly dependent on Russian gas.

Some indicators suggest that energy prices will remain high in the short term.

Lagarde also warned that an abrupt boycott of Russian energy would have a significant impact on the eurozone.

Russian president Vladimir Putin said that Europe would not substitute Russian gas and accused the European Union of destabilizing the market and causing price rises with its debate on an embargo on Russian oil and gas.

Food prices have risen sharply due to high transport and production costs, and higher fertilizer prices, in part because of the war in Ukraine.

The president of the ECB also predicted that growth in the euro area will be weak due to the war in Ukraine.

Lagarde stressed that “several factors point to slow growth also in the period ahead. The war is already weighing on the confidence of businesses and consumers,” because of the uncertainty it brings.EFE

aia/eld/mp