Research Briefing | Nov 18, 2021

Eurozone | Low-flation risks to come back to the fore in late-2022

Ipad Frame - 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.
Back to Resource Hub

Related Services

Post

United States: Student loan payments are less concerning going forward

Despite last summer's US Supreme Court decision, the Biden administration has forgiven $153bn in student loan debt through piecemeal actions. This, combined with a new, more generous income-driven repayment plan and a yearlong grace period following the end of the pandemic-era pause on student loan payments, has reduced the amounts borrowers in the aggregate are paying back to the Department of Education.

Find Out More

Post

UK: Supply constraints are probably less prominent in the south

The extent to which UK employers can respond to likely 2024 interest rate cuts with increased output, rather than rises in prices and wages, will partly reflect the extent of spare capacity. This will inevitably vary by region. Evidence on this is imperfect, but in terms of capital assets (including intangibles) and labour availability, southern regions appear to be in a stronger position than those in the UK's traditional industrial heartland.

Find Out More