Why we see eurozone inflation slowing sharply next year
We have revised our 2022 eurozone inflation forecasts sharply higher, to 6.0%, since the start of the Ukraine war, as energy and food prices began to soar and new supply bottlenecks emerged. That said, we still see inflation decelerating sharply to 1.3% in 2023, putting us below consensus. While we recognise significant risks to our views, inflation should slow to below 2% in H2 2023.
What you will learn:
- A fall in energy and slowdown in food prices lie at the core of our call.
- For now, commodity prices remain at the mercy of news out of Russia and Ukraine, but progress in diversifying energy sources and rising global supply amidst slowing demand should see energy prices fall next year.
- A slowdown in core inflation due to falling consumer goods prices next year is our other key call.
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