Estimates by experts at the German ZEW Institute for Economic Research indicate that inflation in the eurozone will remain above the European Central Bank's 2% target for years to come.
The experts notably lowered their inflation forecasts for the first time in a long period. They expect inflation to average 5.5%, 3.3%, and 2.5% in 2023, 2024, and 2025 respectively - significantly above the ECB target.
Earlier forecasts in May pointed to inflation reaching 5.8% in 2025 and averaging 3.7% this year and next. The outlook reflected more pessimism compared to the ECB, which expects 5.4% inflation this year.
High wages continuing to drive eurozone inflation while weak economies act as a dampener. Inflation surged due to energy and food prices after Russia's war on Ukraine, following years of zero or negative rates.
The ECB has responded with an unprecedented series of nine interest rate hikes so far, bringing the key rate to 4.5%. Higher borrowing costs are meant to reduce demand and curb inflation. Eurozone inflation reached 5.5% in June and 6.1% in May.
The survey involved 125 financial experts. Their estimates suggest inflation in the currency bloc will remain persistently above the ECB's target through at least 2025.
