Lane Warns Second Energy Shock Will Fuel Eurozone Inflation

European Central Bank (ECB) Chief Economist Philip Lane has warned that a second energy price surge will push Eurozone inflation higher and keep it elevated longer than initially anticipated. Lane made these comments in an interview with Swiss daily Le Temps published on the 22nd, citing a 'second energy shock' as the main concern.

This 'second energy shock' refers to rising gas prices in tandem with oil prices, which are expected to exert broad-based pressure across the price spectrum. Lane emphasized that this increase will make inflation higher and more persistent, and that it may take until mid-2027 for inflation to begin descending towards the ECB's 2% target.

The current spike in energy prices is also expected to have a ripple effect on food and electricity costs, as well as goods prices more broadly. However, Lane noted that price pressures in the services sector should remain relatively contained.