Germany's five leading economic institutes now see inflation accelerating to 3.2% in 2027, not fading. ECB officials trace the persistence to war-damaged refining capacity that will take years to rebuild.
Pictetβs Frederik Ducrozet argues euro-area PMIs are defying oil and political gravity, with AI and defence spending supporting activity even as inflation pressures reappear. Source
Something odd sits inside Thursday's upgrade from Germany's five leading economic institutes. They lifted their 2026 GDP forecast to 1.3%, up from a spring estimate of 0.6%, a real growth upgrade. Inflation should have cooled alongside it. Instead it went the other way: consumer-price inflation is now seen at 2.8% this year, accelerating to 3.2% in 2027, before easing to 2.0% in 2028. That is not the peak-then-fade path central banks build their credibility on. It is an inversion, and it landed in the same week European Central Bank (ECB) Vice-President Boris VujΔiΔ told a Cleveland audience that diesel prices will "probably stay high for long."
