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2021/11/26 / Erste Group Research

Has Eurozone inflation peaked?

Next week, a flash estimate of Eurozone inflation for November will be published. In October, inflation reached its historical high at + 4.1% y/y. Energy prices were mainly responsible. After energy prices stabilized at a very high level in November (based on the monthly average) compared with October, we also expect Eurozone headline inflation to stabilize at a high level.

The climate policy plans of the new coalition government in Germany make it clear that the energy turnaround is to be accelerated by 2030. The phase-out of coal-fired power is to be brought forward to 2030. However, recent months have shown that the resulting temporary increase in dependence on natural gas could trigger bottlenecks and significant price rises.

During the last few weeks, the US dollar gained significantly against the euro. The reasons were manifold. The most important was probably higher interest rate expectations for the US. In addition, there were rising COVID-19 infection figures in Europe. We continue to assume that dollar strength is not justified.

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General information

AuthorErste Group Research
Date2021/11/26
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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