Business

Economists: Ukraine war could further fuel eurozone inflation

Photo: ANP

Soaring commodity prices due to the war in Ukraine are likely to further fuel inflation in the eurozone, say economists at US investment bank Goldman Sachs. They think inflation will rise to a peak of 6.5 percent in May and then ease to 5.4 percent by the end of the year. In January inflation in the euro area was 5.1 percent.

The Russian invasion of Ukraine has sent oil and gas prices soaring amid concerns about supply disruptions from Russia due to Western sanctions. Other commodities such as metals and agricultural products are also rising in price. These costs in turn lead to higher prices for companies, which will again be passed on in the sales prices. As a result, the purchasing power of consumers is coming under increasing pressure.

The German research institute Ifo also thinks that the price level will rise more strongly than previously thought because of the conflict.

The European Central Bank (ECB) has already indicated that it is closely monitoring the consequences of the war. Due to high inflation, the ECB could raise interest rates this year. But the disruptive effect of the war in Ukraine on the European economy may also make the ECB more cautious about raising interest rates and phasing out support measures.



Economists: Ukraine war could further fuel eurozone inflation
Source link Economists: Ukraine war could further fuel eurozone inflation

Back to top button