Eurozone Inflation Expected to Be Around 3% in 2022 -- Analysis
December 21 2021 - 5:30AM
Dow Jones News
By Maria Martinez
Eurozone inflation is on the rise. Headline inflation jumped to
4.9% year-on-year in November, reaching its highest level ever.
Meanwhile energy inflation continues its relentless advance, rising
to 27.5% from 23.7% in October. These upside surprises have caused
many analysts to upgrade their inflation forecasts for 2022.
The European Central bank said it sees headline inflation
averaging 3.2% next year, almost double its previous forecast at
1.7%. Two thirds of this upgrade is based on the assumption of
higher energy inflation, according to ECB President Christine
Lagarde.
Pantheon Macroeconomics forecasts eurozone headline inflation
will be at 2.7% in 2022, 0.3 percentage points up from previous
estimates. Pantheon sees inflation at 4.8% in December, before a
fall to around 3.5% in the first quarter.
Taking into account recent inflation-data surprises and
energy-market pricing, Barclays has also raised its eurozone
inflation projection for 2022. Barclays forecasts the bloc's annual
inflation rate will average 3.4% in 2022, 1 percentage point higher
than its previous forecast.
In the near term, Goldman Sachs continues to expect upward
pressure in goods prices amid high raw material costs due to supply
chain disruptions and rising transport costs from elevated energy
prices.
However, GS says eurozone headline inflation peaked in November
and will decrease sharply in January 2022 to 3.7% year-on-year, as
base effects wash out.
Looking beyond the near term, Goldman Sachs expects underlying
inflation pressures to build gradually, pushing eurozone headline
inflation to 1.7% year-on-year on a sustainable basis at the end of
2024.
Write to Maria Martinez at maria.martinez@wsj.com
(END) Dow Jones Newswires
December 21, 2021 06:15 ET (11:15 GMT)
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