Euro Area Inflation Forecasts Rise on Energy Costs
Businesses with euro-area costs should plan for higher price pressure through 2027 as energy effects build.
Updated on Nov. 4, 2026 in Inflation
Live Poll
Do you expect your household's everyday costs to keep rising over the next year?
Professional forecasters surveyed by the European Central Bank raised their euro area inflation expectations for 2026 and 2027, and also lifted near-term growth forecasts. Operators with euro-area exposure face a higher price backdrop for the next two years.
Why it matters
The upward revision is driven mainly by higher energy prices and their indirect effects on the wider economy. Because additional effects from the energy shock are expected mainly in 2027, cost pressure may build after the current budgeting cycle rather than resolve quickly.
Forecasters lifted 2026 headline inflation to 3.0% and 2027 to 2.6%, while long-term expectations held at 2.0%. The survey drew 52 responses from experts at financial and non-financial institutions in Europe, and unemployment is forecast at 6.4% for 2026.
The players
European Central Bank
The euro area's central bank, which sets monetary policy for the currency bloc and publishes the Survey of Professional Forecasters.
The details
The forecasters attribute the upward revision mainly to higher energy prices and the knock-on effects those prices carry through the economy. Headline and core inflation expectations were both revised up for 2026 and 2027, which means the pressure is not confined to fuel and power. The survey points to the largest additional effects arriving in 2027, so the cost path is expected to steepen later in the forecast window.
Timeline
October 2-7, 2026: Fourth-quarter Survey of Professional Forecasters conducted.
2026: Headline inflation forecast at 3.0%.
2027: Headline inflation forecast at 2.6%, with most energy-shock effects expected.
2028: Headline inflation forecast returns to 2.0%.
Market Landscape
Long-term expectations stayed anchored at the ECB's 2.0% target even as near-term forecasts moved higher. That pattern suggests professional forecasters see the energy shock as a temporary deviation rather than a shift in the bloc's inflation regime.
Businesses with euro-area costs should model headline inflation near 3.0% in 2026 and 2.6% in 2027 rather than assuming a quick return to target. Procurement and pricing teams should plan for energy-linked cost pass-through to build into 2027.
The takeaway
The forecasts imply that energy-driven cost increases may intensify in 2027 even as long-term expectations hold at 2.0%. Operators should stress-test next-year budgets against the higher 2026 and 2027 inflation paths and monitor the next Survey of Professional Forecasters for any further revisions.
Further reading
For broader context on how price pressures are tracked and forecast across economies, see the Inflation section.
Source note: This article includes information reported by Fibre2fashion.
Live Poll
Do you expect your household's everyday costs to keep rising over the next year?
