Analysts from Rabobank have sounded the alarm on potential Eurozone inflation spikes amidst the Houthi attacks on ships in the Red Sea. Their foresight indicates a possible 0.5 percentage point increase in inflation over the next two years. However, a de-escalation scenario could mitigate this to a mere 0.1 point surge. Conversely, should the Suez Canal closure persist, inflation could soar by 1.8 percentage points, rattling both the European Central Bank and the financial markets.
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21 sats \ 0 replies \ @joyetta_ware 29 Feb 2024
Ggy
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0 sats \ 3 replies \ @premitive1 29 Feb 2024
Supply and Demand of the underlying good are not related to inflation. changes in the money supply are related to inflation.
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0 sats \ 2 replies \ @GhostofTruth OP 29 Feb 2024
In the short term, supply-side destructions can very well have an inflationary effect. After that, the economy can adjust if it has a free market.
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21 sats \ 1 reply \ @premitive1 29 Feb 2024
It seems to me you're conflating supply curve shift to the left with price inflation, which is a phenomena of increased money supply.
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229 sats \ 0 replies \ @GhostofTruth OP 29 Feb 2024
I know. You're right. It's a supply shock (S to the left) in the isolated sector. Inflation refers to MS. Correct
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