Inflation has reached a 13-year high in European countries, challenging the European Central Bank’s (ECB) view that price pressures are largely benign and will soon fade.
According to the European Union’s Statistics Agency Eurostat’s October 1 data (PDF), consumer price inflation in the eurozone accelerated to 3.4 percent year-on-year in September, from 3 percent a month earlier and 2.2 percent the previous month. This is the highest reading since September 2008 and slightly ahead of the analyst’s forecast of 3.3 percent.
Energy costs were behind inflationary pressures, with energy prices up 17.4 percent year-on-year and 1.3 percent in September.
Among the reasons behind rising fuel costs in Europe are the epidemic recession, OPEC production caps, and a return to demand from global transport barriers. Laclaster output from windmills and solar farms in Europe, low natural gas reserves, and maintenance work have also contributed to nuclear generators and other offline plans.
Fuel consumption took the next highest category – processed food – to inflation, which rose 2.6 percent in the 12 months to September, although it remained stable throughout the month.
Supply chain problems As seen in the data, production and shipping constraints contributed to the rise in prices of sustainable products, which rose 2.1 percent year-on-year and 2.3 percent in September.
Policymakers at the ECB, such as their counterparts at the Federal Reserve, have argued that inflation is transient and will fade once supply chain dislocation subsides. Both expect price pressures to ease next year and come closer to their respective targets মূলত basically the same 2 percent long run average that adjusts to a medium overshoot to compensate for inflation below the target.
Nevertheless, ECB President Christine Lagarde has sounded a more cautious tone this week, pointing to an increased risk of inflation, even calling for patience and warning against a very quick stimulus withdrawal.
Some economists believe that central bank policymakers may underestimate the risk of inflation.
“In our view, some one-factor should actually be eliminated next year, but inflation may be a sticker compared to the current ‘transitory’ camp,” said Kirsten Brzezinski, Macro’s global head at ING Germany. Friday.
But while economists generally expect heated debate at the next ECB policy meeting on the optimal pace of asset purchases, discussions on raising interest rates are far from over.
“With another wave of headline inflation, the European Central Bank is heating up for December discussions on whether a pure reconsideration of asset purchases is sufficient or whether a more significant rewinding would be better,” Brajesky wrote.
This News Originally From – The Epoch Times