Report
Why we do not believe inflation will fall in the euro zone
The vast majority of analysts believe that headline inflation in the euro zone will continue to fall until it reaches around 2% at the end of 2024. We do not believe in this scenario at all; on the contrary, we believe that headline inflation will rise in 2024 from its first-quarter level. This is because: Import prices will continue to accelerate in the euro zone in 2024; Unit labour costs will rise by around 4% in 2024, since we do not believe that productivity will recover, and stronger growth than in 2023 will prevent a fall in the profit margin; The euro will depreciate against the dollar because, if the ECB wants to cut interest rates before the Federal Reserve, imported inflation will be high ; The euro-zone labour market will remain tight in 2024 as productivity will not increase and employment will continue to increase more than the working-age population.
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Natixis
Based across the world’s leading financial centers, Natixis CIB Research offers an integrated view of the markets. The team provides support to inform Natixis clients’ investment and hedging decisions across all asset classes.
Patrick Artus
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