Eurozone Inflation Target May Take Till 2027 Amid Oil Price Surge

European Central Bank chief economist Philip Lane expects eurozone inflation to approach the target rate of 2% by mid-2027 due to soaring oil and gas prices. So far, there hasn't been a 'spill' from these high energy costs to other prices, but Lane warns that this may change later in the year.

Retail fuel prices in the European Union have reached all-time highs, with gasoline up 29% since February and diesel up 40% on average. These high prices pushed the eurozone's energy inflation reading for August to 14.3%.

Lane predicts that the second wave of energy price increases will lead to higher and more persistent inflation before it recedes towards the target rate in mid-2027. He also warns that upward pressure on food prices, electricity costs, and goods prices is likely due to these high energy prices.