ECB Economist Sees Inflation Hitting 2% Only in Mid-2027
Philip Lane says energy costs will delay the return to the 2% target until mid-2027. EU fuel prices have surged significantly since February.
Key points
- ECB chief economist Philip Lane forecasts eurozone inflation will reach the 2% target only in mid-2027.
- Gasoline prices in the EU have risen by 29% and diesel by 40% since February.
- Energy inflation in the eurozone stood at 14.3% in August, driven by high oil and gas costs.
Eurozone inflation will not reach the two percent target until mid-2027. This timeline reflects the persistent pressure from elevated energy costs.
European Central Bank chief economist Philip Lane made the assessment in a recent interview. He warned that a second wave of price increases is likely.
Energy costs drive persistent inflation
Lane stated that high oil and gas prices keep overall inflation elevated. This prevents the rate from declining toward the policy goal sooner.
The official noted no significant pass-through to other categories yet. However, he expects food and electricity prices to rise later this year.
Impact on services should remain limited according to his analysis. The primary driver remains the volatility in energy markets.
Record fuel prices in EU markets
Retail fuel prices in the European Union are at record levels. Gasoline prices rose by twenty-nine percent since February of this year.
Diesel prices increased by up to forty percent over the same period. The ECB expects diesel prices to peak by October this year.
Supply risks complicate the outlook
OilPrice reports that the ECB forecast may be overly optimistic. Further cuts in diesel supply could sustain higher price levels.
Uncertain prospects for a ban on US diesel exports add to the risk. Energy inflation in the eurozone stood at fourteen point three percent in August.
