UBS Lifts Eurozone Inflation Forecast Amid Higher Energy Prices

UBS has raised its Eurozone inflation forecast due to higher energy prices and a one-off increase in German healthcare costs. The bank's economists led by Anna Titareva expect headline inflation to climb to 3.5% year-over-year in September, up from 3.2% in August, and peak at around 3.6% in early 2027.

The annual average forecasts have been lifted to 2.9% for 2026, up from 2.8% previously, and to 2.7% for 2027, up from 2.5%. The increase was driven entirely by higher energy inflation, while underlying measures such as exclusion metrics, trimmed means and domestic inflation were broadly stable or slightly lower.

UBS noted that August's inflation reading 'does not indicate a broadening of inflation', with the final Eurozone HICP estimate revised slightly lower to 3.2% from an initial 3.3%. The increase was driven entirely by higher energy inflation, while underlying measures such as exclusion metrics, trimmed means and domestic inflation were broadly stable or slightly lower.