The end of the year 2021 can hardly be called positive for the EU. If it is not one thing, it is another. After the energy crisis, the euro region is experiencing the highest inflation on record. The inflation rate has already jumped to 4.9%.
The expected increase in consumer prices occurred amid a robust economic recovery. However, it caused panic primarily outside Europe. In some countries, even the previous EU prices were rather high. Interestingly enough, EU policymakers are not worried about a surge in inflation. The ECB says it sees no reason to panic yet. The central bank believes that inflation growth in November was quite predictable. The inflation spike was partly attributed to turbulence in the energy market and temporary factors. Pablo Hernández de Cos, the Governor of the Bank of Spain, is quite optimistic about the economic outlook. He is confident that inflationary pressures are not so strong to trim the multibillion-dollar ECB's quantitative easing program.
The EU consumer price index in November beat estimates. Analysts had expected the figure to total 4.5%. Therefore, traders are waiting for revised economic and inflation outlooks. It will also help the ECB make a decision on the key rate hike. In September, forecasts showed inflation easing to 1.5% in 2023. Soaring energy prices are the main reason for a rise in inflation in November, Maeve Cousin, a senior economist at the eurozone agency, said. This is why market participants fear a new increase in consumer prices. However, inflation is likely to fall below 2% by the end of next year, she added.
