By Hans Bentzien and Ed Frankl
The eurozone faces a bumpy final stretch to the European Central Bank's 2% target as services prices, driven by wages, remain a key challenge, its executive board member Isabel Schnabel said Thursday.
While the first part of the falling path of inflation was faster than many expected, it was largely driven by supply shocks such as through energy and food, Schnabel told an inaugural conference of the ChaMP Research Network in Frankfurt.
Domestic inflation, on the other hand, has proved much more persistent, she said.
Services prices in particular remain a concern and need to be watched closely, with the pass-through of higher wages to prices much stronger than in the manufacturing sector, she said.
"It looks like the consensus is emerging that we could face quite a bumpy last mile," Schnabel said.
Inflation in the eurozone was 2.4% in March, having fallen gradually from 10.6% in 2022, though services inflation has held steady at 4.0% since November of last year.
Write to Hans Bentzien at hans.bentzien@dowjones.com and Ed Frankl at edward.frankl@wsj.com
(END) Dow Jones Newswires
04-25-24 0604ET
