Rising oil prices will lead to higher inflation in the eurozone over the next two years than previously expected, a European Central Bank survey said today.
The report comes a day after ECB president Mario Draghi said it was still too early for the bank to start scaling back its easy money policies despite a recent spike in consumer prices.
According to the ECB's quarterly survey of professional forecasters, eurozone inflation is expected to rise by 1.4 per cent in 2017 and 1.5 per cent next year, up from a previous estimate of 1.2 and 1.4 per cent.
"These upward revisions largely reflect the increase in the price of oil," the ECB said in a statement.
The forecasters also gave their first readings for 2019, when they predict inflation will hit 1.6 per cent -- still a way off the ECB's goal of keeping the rate below but close to 2 per cent.
The Frankfurt-based institution has embarked on an unprecedented effort to drive up growth and inflation in the region using a combination of cheap loans to banks, ultra-low interest rates and a massive bond-buying programme.
But calls have grown for the bank to start winding down its stimulus after monthly data showed that eurozone inflation nearly doubled in December to 1.1 per cent.
Draghi however brushed off those pleas on Thursday, noting that core inflation -- which excludes volatile food and energy prices -- remained stubbornly low.
"There are no signs yet of a convincing upward trend in underlying inflation," Draghi told reporters.
The forecasters questioned in the survey appeared to agree with that assessment, saying that they expected core inflation to reach just 1.1 per cent in 2017 before climbing slightly to 1.3 and 1.5 per cent in the following years.
Oil prices have risen as a result of a deal between OPEC and non-OPEC oil producing countries in late 2016 to cut output after a supply gut saw the commodity plumb lows of less than USD 30 per barrel.
Since the agreement, prices have hovered around $50 a barrel.
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