Policy Article

Rising Inflation – Transitory or Cause for Concern?

Monetary Dialogue Papers

Consumer price inflation in the euro area has sharply risen to 3% in the course of 2021. This increase was mainly due to higher energy prices and other transitory factors. Recent macroeconomic forecasts generally expect inflation to return to below target values next year. However, there are several factors in place that could lead to more sustained upward pressure on prices, and materialisation of these upward risks could force the ECB to take difficult choices.