Research Euro Area: Mind the inflation gap

During the last months, inflation fears have returned to markets, notably in the US, which have spilled over to the euro area. Looking at both external and domestic drivers of inflation, we try to shed light on the question whether a regime-shift in core inflation is underway in Europe following the corona crisis.
Overall, we find limited evidence that euro area core inflation is about to return to the highs preceding the Global Financial Crisis on a sustained basis. However, we have lifted our core inflation forecast for 2022 to 1.2% (1.0% previously), mostly on the back of higher goods price inflation

Danske Research Team Danske Bank A/S

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Danske Research Team

Danske Bank A/S

Research is part of Danske Bank Markets and operate as Danske Bank's research department. The department monitors financial markets and economic trends of relevance to Danske Bank Markets and its clients.

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