Euro Zone Inflation Set for Long-Term Boost from Energy Costs
The European Central Bank's Chief Economist, Philip Lane, has warned of higher and stickier inflation in the euro zone due to a fresh surge in energy costs. According to Lane, this 'second wave' of price rises is not only affecting oil but also gas, leading to upward pressure on food prices, electricity, and goods in general.
Lane stated that this second wave of energy price rises should exert upward pressure on food prices, on energy including electricity, and on goods in general. However, he noted that pressure on services will remain contained.
The ECB has raised rates twice since the Iran war-driven energy costs surge, with policymakers signaling further tightening ahead. Eurozone inflation is projected to reach around 4% in the near term, well above the bank's 2% target.