Inflation fell sharply in most countries in the region last month, due in large part to a surprise drop in food prices. This appears to have been driven by one-off factors relating to the outbreak of e.coli in Germany. As such, we may see a bounce in food inflation over the coming months as the lagged effects of the spike in global commodity prices over the past year or so continue to feed through. Nonetheless, the bigger picture is that inflation should continue to surprise on the downside over the next twelve months. With growth set to slow next year, monetary policy will therefore remain supportive.
Become a client to read more
This is premium content that requires an active Capital Economics subscription to view.
Already have an account?
You may already have access to this premium content as part of a paid subscription.
Sign in to read the content in full or get details of how you can access it
Register for free
Sign up for a free account to gain:
- Unlock additional content
- Register for Capital Economics events
- Receive email updates and economist-curated newsletters
- Request a free trial of our services