Chart of the week
The Russia-Ukraine conflict has led to a sharp rise in oil and gas prices, which will further accentuate the rise in consumer prices, even though inflation is already very high in the Eurozone.
Energy prices already account for a large part of this phenomenon in the Eurozone, as shown by the difference between headline inflation, which reached +5.8% at the end of February, and inflation excluding food and energy, which stands at +2.7%. However, underlying inflation is also clearly accelerating, as shown below by the three-month change in prices excluding food and energy, which rose by nearly 4% over one year.
This graph shows a real acceleration in prices since the middle of 2021, and this phenomenon cannot be attributed to base effects linked to the return to normal of the German VAT (December 31, 2020).
Business surveys on price trends in the Eurozone remain at historically high levels, particularly for the retail sector. Given that prices excluding food and energy had stalled in March and April 2021, and that the impact of the recent rise in energy prices has yet to be factored into the calculations, we can expect inflation to accelerate sharply in the coming months.
The opinion expressed above is dated March 4, 2022 and is subject to change.
*Sources : Bloomberg and calculation from Lazard Frères Gestion
As of : February 28, 2022
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