The Bruegel think tank warned about the inflation outlook for Europe, noting that it will continue to rise due to the energy crisis.
Maria Demertzis, deputy director of the Brussels-based think tank, told Euronews on Thursday that rising energy prices are the root cause of the current inflationary situation that affects "Europe a lot more than it has affected the US because we depend on Russia a lot more than others do."
The deputy director said the cost-of-living crisis across the European Union is set to worsen, driven by rising food, fuel and electricity prices.
"We have seen here in Belgium, where I live, an increase [in the price] of flour, a doubling of flour [costs], which, of course, has got implications for the price of bread, [which is] quite important," Demertzis said.
"We'll feel it in our pockets when we will fuel our cars when we buy our weekly food. And I dare say things probably need to get a little bit worse before they get better. So, in that respect, I think we really need to brace ourselves for a little bit more of this," the deputy director said, forecasting another year of abnormal inflation.
�� INFLATION— Bruegel (@Bruegel_org) June 8, 2022
Unlike the previous two peaks in divergence, the current differences in inflation reflect differences in geopolitical dependencies in terms of the energy mix and also in the energy intensity of production. @mariademertzis
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Real GDP growth in both the EU and the euro area is expected to reach 2.7 percent this year, down from the previous 4 percent projection. Growth is projected to decline even further next year, to 2.3 percent. Inflation, previously forecast to reach 3.9 percent, now looks set to average 6.8 percent.