13.07.22
This edition of our Economic Watch series analyses Euro Area inflation and its implications across real estate.
Key takeaways from June include:
• Core inflation, which excludes energy, food, alcohol, and tobacco, was more subdued at 3.7%, but well over the ECB’s 2% target
• We expect that Euro Area HICP will peak in Q2 2022, but fall to 5.8% by the end of the year, before falling below the 2% target by the end of Q4 2022, being pulling back further in 2023
• Higher inflation has already led to steep increases in long-term interest rates, and the ECB is expected to increase short term interest rates by at least 75 bps by year end. This combined with high inflation is expected to lead to a slowdown in economic growth during H2 2022