Consumer demand has been a bigger driver of inflation in the US than in the eurozone, according to research by the European Central Bank that foresees continued weaker underlying price pressures in the currency bloc.
Higher headline inflation in the eurozone had largely been driven by higher energy prices, said the ECB economic bulletin. However, underlying price pressures had increased more gradually in the bloc than in the US and were expected to remain lower in the near term.
“A stronger consumption-driven recovery in the US has been a key driver of differences between underlying inflation in the two economies,” noted Gerrit Koester in the research published on Tuesday, adding that the near-term growth outlook was weaker for the eurozone than for the US.