Brussels, Europe Brief News – Brussels has informed that the inflation is likely to stay on the higher side all across the eurozone until at least the end of the summer. They are blaming the increase in energy prices to be the main reason.
According to the latest economic prediction from the European Commission, the inflation rate will reach 4.8% and stay more than 3% in the first quarter of the year.
They further added that the individuals and businesses will have to wait for the fourth quarter to witness the drop in the inflation rate.
These predictions can only come true if the supply bottlenecks ease down and the gas prices drop with the temperature turning warmer. Also a lot depends on the on-going geopolitical tensions between Ukraine and Russia.
Paolo Gentiloni , EU commissioner of the economy said “ An acceleration of global inflation could entail a faster-than-anticipated tightening of monetary policy, with repercussions on global financing conditions and demand”
As per the recent reports, the inflation is hitting an all time high of 5.1% on an annual basis mainly because of the expensive energy supplies. The energy supply has witnessed an enormous 28.6% price increase.
Unprocessed food, such as fresh fruit and vegetables are also adding to the inflationary pressure as a result of higher cost of fertilisers.
It has been predicted that the European Union will have to deal with a 3.9% average inflation rate throughout the entire year.
The countries that are likely to be hurt more from the price hikes are Poland (6.8%), Lithuania (6.7%) and Slovakia (6.4%). Gentiloni also said that inflation in the euro zone can drop to 1.7% in 2023.
All eyes on Frankfurt
The focus has been shifted from Brussels to Frankfurt where ECB president Christine Lagarde will tell if her institution will raise interest rates to control the inflation.
The new covid-19 mutation coupled with presisiting power crunch, causes a slowdown in EU’s economic activity during the last couple of months of 2021 and continues to limit growth.
Gentiloni said “ The omicron variant has been spreading rapidly, with daily new cases still chasing one record high after another in many countries though recent days give cause to optimism that the peak has passed for Europe as a whole”.
