ECB Policymaker Warns of Upward Inflation Risk Due to Rising Energy Costs

European Central Bank policymaker Peter Kazimir expressed concerns about euro zone inflation, stating that it could be higher than already elevated projections. The ECB raised interest rates for the second time this year and increased its inflation projections, prompting market bets for up to three more rate hikes in the coming year.

Kazimir, Slovakia's central bank chief, said his attention is now focused on gas and electricity prices, which are at a four-year high due to European nations' hesitation to fill gas storages over the summer. Storage levels are far below historic norms, leading to surging gas prices that will likely push up heating and electricity costs and fuel inflation.

Kazimir noted that food price growth is currently low but expected to pick up in the coming months due to a perfect storm of factors, including a European drought, the El Nino weather phenomenon, and soaring diesel and fertilizer prices. He stated that 'inflation risks are clearly tilted to the upside' and that the energy shock has lasted longer than many expected.