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The European Commission predicts a drop in inflation, despite the increase in oil prices

2024-05-16 11:33:10Biznes SHKRUAR NGA REDAKSIA VOX

The European Commission predicts a drop in inflation, despite the increase in

Inflation may be only 2.2% in the EU next year. Better-than-expected data will mean inflation will nearly halve this year, despite price increases in key commodities such as crude oil, the European Commission has predicted.

Forecasts released today (May 15) show growing optimism about the state of the economy as voters worried about rising prices prepare to go to the polls.

"We have turned the page on a very challenging 2023," European Economic Commissioner Paolo Gentiloni said in a statement, forecasting growth of 1% across the bloc this year, but added: "With two wars going on not far away from us, downside risks have increased.”

Dealing with rising prices is seen as the number one issue ahead of June's European elections. According to a poll published in March, more than two-thirds of Europeans say it should be a priority.

The Commission now predicts that EU inflation will fall to 2.7% this year, after reaching a high of around 10% as the pandemic and Russia's war in Ukraine weighed on the economy.

Addressing these problems has led the European Central Bank, which is supposed to keep eurozone inflation to 2%, to raise interest rates by record amounts, and in April, its governing council said its policy would remain restrictive for " for as long as necessary".

Energy prices are still rising, but calmer food and other product markets are cooling inflationary pressures, the Commission said, adding that the EU economy added two million jobs last year.

With GDP growth forecast at 1.6% next year, the EU economy is expected to grow faster than rivals such as Japan and the UK, but less than the US.

But officials cite an uncertain global outlook weighing on their forecasts, which assume that war-torn Ukraine will be able to begin reconstruction by early 2025 and that the conflict in the Middle East does not escalate geographically.


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