29/11/2021

Tannochbrae

Built Business Tough

Eurozone inflation hits 2pc for first time since 2018

Capital Economics said it expected eurozone inflation to keep rising in the coming months to about 2.5pc in the second half of the year. “Energy inflation will increase a touch further; there may be some ‘opening-up inflation’ as companies in the travel and hospitality sectors take advantage of pent-up demand to raise prices; and manufacturers may pass on part of the increase in input prices to consumers.”

The ECB presents its latest forecasts on June 10. Core inflation, a less volatile measure that excludes volatile items such as food or fuels, stood at just 0.9pc in May.

The OECD also said this week that inflation would accelerate in coming months, boosted by higher operating costs and reduced competition as a result of bankruptcies, but those pressures should fade by the end of the year.

It still fears “upside risks” in the longer term as the recovery proceeds. The labour market has already started to show signs of improvement. Eurozone unemployment unexpectedly dropped to 8pc in April, Eurostat said.

At the same time, German companies made less use of the furlough programme that helped millions of workers hang on to their jobs during the pandemic. According to a separate report, joblessness in the country continued to decline in May.