European Inflation Won't Stabilize Until Next Year Due to Energy Price Resurgence

The European Central Bank's chief economist, Philip Lane, has warned that inflation in Europe will not stabilize until next year due to a resurgence in energy prices. In an interview with Swiss daily Le Temps, Lane stated that the second wave of energy price increases will exert upward pressure on prices across groceries, broad energy such as electricity, and general goods.

Lane also projected that the eurozone's inflation rate would fall to 2 percent around the middle of next year. He emphasized that if a stronger and more persistent shock occurs this fall, it will weigh on the economy. The current inflation rate in the eurozone is at 3.2 percent, driven by the Middle East conflict and rising energy prices.

The European Central Bank has already raised its three key policy rates by 0.25 percentage points each in response to the rising inflation. Several European countries are reviving energy price stabilization measures due to international oil prices rebounding due to armed conflicts between Saudi Arabia and Yemen's Houthi rebels.