European Inflation Won't Stabilize Until Next Year, ECB Economist Warns

Philip Lane, the chief economist at the European Central Bank (ECB), warned that inflation in Europe will not stabilize until the middle of next year due to a resurgence in energy prices.

Lane stated that 'we see the second wave of energy price increases keeping inflation higher for longer,' which will exert upward pressure on prices across groceries, broad energy such as electricity, and general goods.

He also mentioned that if a stronger and more persistent shock occurs this fall, it will weigh heavily on the economy.

The eurozone's consumer price inflation jumped to 3.2 percent last month, driven by the Middle East conflict and rising energy prices, which is the highest level in about three years since it reached 4.3 percent in September 2023.

As international oil prices rebound due to armed conflicts between Saudi Arabia and Yemen's Houthi rebels, several European countries are reviving energy price stabilization measures, including Germany, which decided to cut fuel taxes on gasoline and diesel by 14 cents per liter from October 1 to December 1.