Inflation – the last mile is the hardest

Question mark already over inflation expectations

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Dr. Jörg Krämer

Commerzbank Economic Research

November 24 2023

Next week's inflation data for the eurozone will show that the rapid decline in inflation is continuing. But the last mile in the fight against inflation will be much more difficult. We use criteria from ECB Executive Board member Isabel Schnabel to show why inflation is unlikely to settle at the targeted 2% in the end.

Inflation in the eurozone peaked at 10.6% in the fall of last year. Since then, it has fallen as rapidly as it had previously risen. In October, it stood at just 2.9%; next week, the EU statistics office is expected to publish a further fall to an estimated 2.7% for November. If inflation were to continue to fall at such a pace, the ECB would soon have reached its inflation target. But the first few miles in the fight against inflation were easy because they were mainly caused by base effects.

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