Euro area inflation is likely to rise again in the course of the coming year – Commerzbank

At first glance, everything is going in the right direction in terms of inflation. Dr. Jörg Krämer, Chief Economist at Commerzbank, shows why one should not bring out the champagne yet.

Next year inflation will return to the stage

Inflation is likely to rise again in the course of the coming year, once the normalisation of price increases for energy, food and other goods has been completed. The inflation rate should settle well above the ECB target.

At some point in the course of next year, the issue of inflation will come back onto the stage. Then the ECB, while generally inclined to loose monetary policy, should find it difficult to cut rates despite a weak economy. One should not celebrate too soon about falling inflation in the coming months.