When do analysts expect inflation to fall in the eurozone?

Inflation in the eurozone is rising. It stood at 4.9% on an annual basis in November, and reached the highest level in its history.

Meanwhile, energy inflation continues to rise steadily, reaching 27.5% from 23.7% in October.

These uptrends have led many analysts to upgrade their estimates for 2022 inflation.

The ECB says inflation will reach 3.2% next year, almost double the previous estimate of 1.7%.

Two-thirds of the upgrade is based on the assumption that energy inflation will rise, according to ECB President Christine Lagarde.

Pantheon Macroeconomics forecasts that inflation will reach 2.7% in 2022, 0.3% higher than previous estimates.

Pantheon expects inflation to reach 4.8% in December, before falling to 3.5% for the first quarter.

In light of recent surprises in inflation data, Barclays has also raised its eurozone inflation forecast for 2022.

It predicts that inflation will reach 3.4% in 2022, 1% more than the previous forecast.

In the short term, Goldman Sachs expects upward pressures on commodity prices due to high raw material costs, caused by supply chain distortions and increased transport costs.

However, Goldman Sachs expects inflation in the euro area to fall to 3.7% year-on-year in January 2022, and expects it to fall below the ECB target of 1.7% by the end of 2024.