Households in the eurozone are braced for an upsurge in inflation over the coming months, raising concerns of a squeeze to the consumer spending that has driven the continent’s recovery.
The European Commission’s monthly survey of economic sentiment revealed a four-year high for household expectations of climbing inflation after a prolonged period of weak price growth since 2012.
Annual eurozone inflation exceeded the European Central Bank’s 2 per cent target for the first time in February at 2.1 per cent – driven by a jump in energy prices as global oil prices have rebounded from decade-lows.
Still, economists and the European Central Bank expect inflation to moderate in the months and end the year below target.
Early data from Germany’s regions supports expectations of a pull back, coming in lower than forecast for Europe’s largest economy.