Eurozone Inflation Likely to Persist Until Mid-2027 Amid Soaring Oil Prices

The European Central Bank's chief economist, Philip Lane, has said that soaring oil and gas prices will keep eurozone inflation elevated for longer. According to Lane, the second wave of energy price increases is likely to put upward pressure on food, electricity, and goods prices.

So far, there hasn't been a 'spill' from oil and gas prices to other prices, but this may change later in the year, with food prices potentially being affected. Lane expects eurozone inflation to approach the 2% target rate towards the middle of 2027.

Retail fuel prices in the European Union are running at all-time highs, with gasoline up by a weighted average of 29% since February and diesel up by as much as 40%. The European Central Bank expects diesel prices to peak by October but may prove overly optimistic given the tight supply and potential US export ban.