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Inflation in the euro zone may skyrocket to 7% in 2022 due to the war

Inflation in the euro zone may skyrocket to 7% in 2022 due to the war

Inflation in the eurozone countries could exceed 7% in 2022 as a result of the impact that the war in Ukraine has on energy and food pricessaid this Thursday the president of the European Central Bank (ECB), Christine Lagarde.

Average inflation will probably be around 5.1%added Lagarde, who predicted, however, that the medium-term objective of 2% could be maintained, although she warned that the ECB’s monetary policy will depend on the economic impact of the war.

The highest level of inflation corresponds to the worst scenario estimated by the ECB expertsadded Lagarde, who stressed that “energy prices are expected to be high for longer” and recalled that gas prices have risen 73% since the beginning of 2022.

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“Pressure on inflation is likely to increase. Russia and Ukraine account for 30% of world wheat exports and wheat prices are 30% higher than at the beginning of the year”highlighted the president of the ECB, who gave a speech at the forum “The ECB and its vigilantes” in Frankfurt (southern Germany).

Lagarde warned that global manufacturing bottlenecks, which had begun to disappear in recent months, are likely to remain in some sectors, with consequences for prices of durable consumer goods.

But given the current situation, The president of the ECB assured that the institution she presides over “will take any measure necessary to guarantee price stability and protect financial stability”.

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As a result of inflationary pressures, Lagarde acknowledged that “Europeans will face higher inflation and slower economic growth in the short term.”

and admitted that “higher energy prices are likely to reduce household savings accumulated during the pandemic” and predicted that these will be diverted towards expenses related to energy consumption.

Lagarde acknowledged that companies will also be affected and recalled that in the past geopolitical events such as the Gulf wars or the attacks against the United States in 2001 had resulted in a decline in investment in advanced economies.

With information from EFE.

Source: Larepublica

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