Eurozone Inflation Target Delayed Until Mid-2027 by Soaring Energy Prices

European Central Bank (ECB) chief economist Philip Lane has warned that soaring oil and gas prices will continue to drive inflation in the eurozone. According to Lane, the current energy price increases will put upward pressure on food prices, energy prices more broadly, including electricity, and goods prices in general.

Lane noted that while there has not been a direct 'spill' from oil and gas prices to other prices, such as electricity, this may change later in the year. He also pointed out that pressures on services are expected to remain relatively contained, but rising fuel costs will continue to weigh heavily on consumers.

The ECB's expectations for diesel prices to peak by October may prove overly optimistic, given the continued supply tightness and potential US export bans.