Inflation Outlook — The Costs of War drive prices up to new heights

Abstract

Abstract The Russian government’s attack on Ukraine and the spiral of sanctions that has been set in motion have heightened inflationary pressure — especially in Europe. The EU’s high dependency on Russian oil and gas imports harbours the risk that inflation in Europe will rise significantly and that the economy will suffers from a loss of purchasing power. The pressure on policymakers to take counter-measures is growing. However, the options are limited in the short term and economically very costly. And longer-term consequences must be taken into account. Energy policy and climate policy must be closely linked.