Lane: Energy Shock to Prolong Inflation Until Mid-2027

Philip Lane, Chief Economist at the European Central Bank (ECB), has warned that the recent surge in energy prices will lead to a prolonged period of high inflation. In an interview with Le Temps newspaper, Lane stated that the euro area is witnessing a second wave of price rises, not only in oil but also in gas.

Lane believes that this new wave of energy price increases will result in higher and more persistent inflation before declining towards the ECB's target from mid-2027 onwards. The ECB has initially anticipated a decline in inflation by 2027, but Lane's comments suggest that this timeline may be revised due to the current energy crisis.

The rise in energy prices has been driven by various factors, including global demand and supply chain disruptions. This increase in energy costs is likely to have a ripple effect on other industries and contribute to higher inflation rates.