Eurozone | Low-flation risks to come back to the fore in late-2022
We see little evidence that the outlook for underlying inflation in the eurozone is much changed from a few months ago. In fact, there’s a high probability that low-flation will make a comeback next year. Thus, speculation of European Central Bank (ECB) hikes in late-2022 seems way off the mark.
What you will learn:
- We have materially raised our near-term inflation views in recent months as energy prices surged more than expected and supply bottlenecks worsened. But we still forecast inflation next year slowing rapidly, heading towards 1% in Q4 2022, averaging 2.0% in 2022 and only 1.2% in 2023.
- Surging durable-goods prices could continue to prop up core inflation in the near term.
- Services inflation, which is a better gauge of demand and wage pressures, has picked up sharply.
Tags:
Related Services
Post
High debt costs suggest European office price correction
Our analysis suggests a 10% correction is needed on average for the major office markets in Europe to compensate for the higher cost of debt, with prime yields required to soften by 10bps-75bps to generate a low-risk interest coverage ratio at a reasonable LTV.
Find Out More
Post
Why an ageing population doesn’t mean soaring inflation
What’s the future for inflation? Joachim Nagel, the new president of Germany's central bank, believes the rapidly ageing global population will play a key role – ramping up pressure on prices in the medium term. While we agree slowing labour supply will stifle output growth, in his recent discussion Nagel failed to fully consider the demand side of the argument.
Find Out More