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2021/09/10 / Erste Group Research

EZ - electricity price drives inflation

Eurozone headline inflation rose to a multi-year high of 3.0% y/y in August. The rise in European electricity prices, which continued unabated in August, played a role. Based on the current energy price dynamics, we raise our inflation forecast for 2021 to 2.2% and for 2022 to 1.8%.

The main drivers for the increase in electricity prices in 2021 are gas and CO2 prices. However, weak wind speeds in many parts of Europe have also affected the energy yield of wind power plants and exerted additional upward pressure on electricity prices.

Next week, the inflation data for August will be published in the US. Inflation data is currently more a risk factor in the US than in the Eurozone due to massive price increases in individual areas during the spring months. The question is whether these effects will remain temporary or whether a sustained higher price dynamic has been triggered.

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General information

AuthorErste Group Research
Date2021/09/10
Languageen
Product nameWeek ahead
Topic in focusMacro/ Fixed income
Economy in focusEurozone, United States
Currency in focusEuro, US Dollar
Sector in focus-
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