“We foresee that inflation will rise further in the near term, but will decline over the next year,” Lagarde said.
Christine Lagarde, President of the European Central Bank (ECB), said that cause of inflation are increase in energy prices and supply problems.
Lagarde made evaluations at the press conference held in Frankfurt after the ECB Governing Council Meeting. Stating that economies have started to recover from the effects of COVID-19, Lagarde reminded that the shortage of materials, equipment and labor prevented production in some sectors, delivery times were significantly prolonged, and transportation costs and energy prices increased. Lagarde said these developments “clouded” the economic outlook for the future.
Stating that they expect economic activities to exceed pre-epidemic levels by the end of the year, Lagarde said, “High energy prices may reduce purchasing power in the coming months. Inflation is rising primarily because of the rise in energy prices and the recovery in demand outpacing supply. We anticipate that inflation will rise further in the near term, but will decline in the next year, “she said.
Pointing out that the increase in inflation is mostly due to the rise in energy prices such as oil, gas and electricity, the increasing demand with the opening of the economy, and the supply shortage, Lagarde noted that they expect these factors to ease in 2022.
Noting that supply bottlenecks and rising energy prices in the near term pose risks to the pace of recovery and the inflation outlook, Lagarde said, “If supply shortages and high energy prices last longer, they may slow the (economic) recovery.” said.
