Eurozone | Recovery Tracker suffers a setback at end-September
Our Recovery Tracker suffered a setback at September’s end, falling 1.1pts to
87.6 after reaching a new pandemic high two weeks earlier. Lower consumption and weaker financial conditions were the main culprits, with the labour market, production, and mobility components falling to a lesser extent.
The health indicator was the only component to advance, rising for the third
consecutive week. With the health situation overall under control and consumer confidence remaining positive, as revealed by the ESI.
What you will learn:
- Inflationary pressures accompanied by surging energy
prices and persistent supply-side disruptions threaten the outlook
- Lower consumption and weaker financial conditions were the key drivers of the dip, with the labour market, production, and mobility components representing smaller drags
- It it is possible that the fall marks a temporary slump and that consumption and mobility metrics will recover in the coming weeks
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
Surging global food prices could drive eurozone core inflation higher
Along with energy prices, global food prices have emerged as a key driver of the eurozone's current inflationary surge. Like other advanced economies, eurozone countries tend to be less exposed to global food price fluctuations. But if persistent and combined with strong demand, high food prices could result in a higher pass-through to core inflation.Find Out More