Why are inflation expectations rising?

Inflation expectations for the eurozone are rising significantly: financial market experts forecast a median inflation rate of 2.7 per cent for 2026 – well above the European Central Bank’s inflation target. In the latest episode of the ZEW podcast “Wirklich Wirtschaft”, Dr. Lora Pavlova, Head of the ZEW Financial Market Survey and researcher in the ZEW Research Unit “Pensions and Sustainable Financial Markets”, discusses the latest findings from the April survey, the role of energy prices and the challenges facing monetary policy. The podcast is available on all popular podcast platforms, such as Spotify, Apple Podcasts and Deezer, as well as on the ZEW website.

The episode focuses on the question of how persistent the increased inflationary pressure is. Although expectations for 2026 and 2027 are above the ECB’s target, respondents expect a return towards two per cent in the medium term. They cite energy prices as the main drivers, but also raw materials, supply bottlenecks, geopolitical tensions and trade conflicts. At the same time, factors such as the weak economic situation in the euro area or an appreciation of the euro tend to have a dampening effect on prices.