Inflation could be prolonged by continual supply issues and threats on Ukraine’s border.
Eurozone CPI for January came in at 5.1%, in line with expectations and reflective of the continual rise in inflation experienced across much of the West. This was a 0.1% increase on the previous reading in December and finally the rapid rate of change appears to have started to slow. It is worth remembering that this time last year, inflation in the Eurozone was only 0.9% - the transient inflation narrative from central banks is far from the reality now. The good news is that inflation appears to be close to peaking and will likely start to ease over the medium term from here. However, with continual supply chain issues and now increasing threats on Ukraine’s border, it is likely that the inflation genie is unlikely to be put back firmly in the bottle as quickly as some would want.
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