Eurozone: inflation has become broad-based

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While the eurozone’s inflation surge (+10.6% since October 2021) is mainly driven by soaring prices in energy (+59.2% year-on-year) and food (+15.5%), the explanation does not end there. Inflation excluding food and energy is also particularly strong at 5.0%. An increasing share of goods and services are displaying high price rises: the year-on-year increase for almost 60 out of 94 categories exceeded 4%.


Some categories are rising in line with energy prices. Transport services, for example, are now up 7.5% year-on-year. However, prices in less energy dependent sectors are also gaining significant pace. Prices in the furniture and furnishings category of housing, which had never increased by more than 2.0% year-on-year, are currently up by 8.5%. Prices in categories that depend relatively heavily on labour costs are also accelerating sharply, with services related to recreation and personal care up 6.1%.

Clearly, energy prices are not the only contributor to eurozone inflation and the fact that rapid price growth has become broad-based heightens the risk of runaway inflation expectations, a situation that the ECB will be attempting at all costs to avoid.

The opinion expressed above is dated November 18th, 2022 and is subject to change.

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