Rising Oil and Gas Prices Prolong Eurozone Inflation Fight Until Mid-2027
The European Central Bank's chief economist, Philip Lane, has warned that soaring oil and gas prices will keep inflation elevated in the eurozone for longer than expected. He stated that energy price increases are likely to lead to higher and more persistent inflation before receding toward the ECB’s target of 2% starting around mid-2027. Lane noted that while there has been no immediate spill-over from rising oil prices into other sectors like electricity, such effects—particularly on food and goods prices—are expected later in the year. Retail fuel prices across the EU have reached record highs, with gasoline up 29% and diesel by as much as 40% since February. The ECB anticipates that diesel prices may peak by October; however, ongoing supply constraints and potential U.S. export bans could delay this outcome. In August alone, energy inflation in the eurozone hit 14.3%, underscoring concerns about prolonged price pressures.
Topics: energy market European Central Bank (ECB) gas prices inflation oil prices