More and more ECB representatives believe that the inflation beast will soon be tamed. Economists at Commerzbank analyze domestic inflationary pressure and the latest inflation surveys among companies and show that it is far too early to sound the all-clear.
More companies are planning price increases again
The significant fall in inflation rates in the Euro Area obviously gives the ECB hope that the sharp rise in consumer prices has been halted. However, a closer look at the price trends in Germany calls for caution here. This is because the decline in the inflation rate has so far been solely due to the slowdown in external inflationary pressure, while domestic price pressure remained strong until the end of last year.
In addition, more companies have recently stated in the Ifo survey that they intend to raise their prices in the coming months.
As the situation is similar in the Euro Area, underlying inflation there should stabilize well above the ECB's inflation target of 2%.
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