Eurozone | Energy prices put another dent in near-term recovery
The surge in European gas and electricity prices over recent months pushed energy prices to an all-time high in August, amplifying a pickup in inflation and pointing the Q4 2021 headline rate towards 4%. This will squeeze households’ disposable income, push up industry’s already proliferating cost base, and possibly accelerate the withdrawal of stimulus by the ECB next year.
What you will learn:
- Strong demand and a combination of supply-side factors have caused a surge in wholesale energy prices, with the near-term outlook subject to significant uncertainty.
- Passthrough to consumer prices varies widely across countries owing to the local energy market structure as well as the scale and type of policy response.
- We estimate the lift to inflation will be between 0.2pp and 0.3pp this year and next.
Tags:
Related Services
Post
Why tariffs won’t strangle Eurozone consumer spending
We think the damage from US tariffs on Eurozone consumer spending will be relatively mild. This is crucial for the Eurozone economic outlook, as the gradual rebound in private consumption is the only growth engine at present.
Find Out More
Post
Eurozone’s bund yields and the term premium to remain elevated
We expect 10-year bund yields to increase towards 2.8% by late 2026, as the term premium remains around 1.1% and the risk-neutral yield climbs above 1.7% over the next few quarters.
Find Out More