Eurozone Inflation to Remain High Until 2027 Amid Energy Shocks

European Central Bank Chief Economist Philip Lane predicts that energy shocks will keep eurozone inflation high until 2027. Lane said in an interview with Le Temps, as reported by Investing.com, that a renewed jump in energy expenses is driving up costs. He noted that the central bank anticipates this energy-led wave to generate stronger and longer-lasting inflation before it eases toward the target starting midway through 2027.

Lane cautioned that the present energy price surge will push up costs for food, power, and other forms of energy, as well as merchandise broadly. However, he said cost pressures in services are expected to remain in check.

The ECB has already lifted borrowing costs on two occasions since the conflict with Iran sent energy prices soaring. Officials have indicated more tightening lies ahead, including a potential further quarter-point rise as soon as October.