The European Commission estimates that inflation will reach “historic” levels in 2022 and climb to 7.6% in the euro zone and 8.3% in the EU as a whole this year, two figures that raise last May’s forecasts by 1.5 percentage points in both cases, in the second economic forecasts it has published since the Russian military invasion of Ukraine.

The Commissioner for the Economy, Paolo Gentiloni, has indicated in a press conference that the inflation forecasts have been “revised upwards due to high energy prices” as well as other inflationary pressures and added that the “risks are linked” to the evolution of the war in Ukraine as well as the energy markets.

Regarding growth, the EU executive has projected that the EU economy will rebound by 2.7% in 2022, in line with the forecast made in the spring, although it has lowered by one tenth the growth forecast for the Eurozone’s GDP, to 2.6%.

At the same time, the European Commission has raised its inflation forecast for the end of this year to 7.6% in the Eurozone in 2022 and to 8.3% for the EU as a whole, two forecasts that it describes as “historic” and which more than double the projections of the Executive prior to the start of the war, 3.5% and 3.9% respectively.

Gentiloni pointed out that “this upturn in inflation has been driven by energy and food prices” and stressed that inflation has affected all “basic” goods and services such as non-energy industrial goods and services.

By 2023, Brussels expects inflation to contract to 4% in the euro area, up from 2.7% in the May forecast. For the EU as a whole, the EU executive has forecast inflation at 4.6%, up from 3.2% in the spring projections.

In its analysis, the European Commission has indicated that many of the negative risks surrounding the spring 2022 forecasts have materialized and has argued that Russia’s invasion of Ukraine has put additional upward pressures on energy and food commodity prices.

All of this has fueled the inflationary forecast and eroded household purchasing power, adding to the slowdown in US growth and the negative economic impact of China’s “strict zero COVID policy,” Brussels has argued.

Regarding 2023, Brussels has corrected its growth estimates by almost one percentage point and has forecast that the GDP rebound for the EU as a whole will be 1.5% and 1.4% for the euro area, compared to the 2.3% set in May for both regions and, moreover, far from the 2.7% for the euro area and 2.8% for the EU that it estimated at the beginning of the year.

In a further step, the economics commissioner noted that world GDP excluding the EU is forecast to grow by 3.0% in 2022 and 3.3% in 2023, which is 0.3 percentage points and 0.4 percentage points lower than in the spring.

In this regard, the European Commission has analyzed that the EU economy remains particularly vulnerable to developments in energy markets due to the high dependence on Russian fossil fuels, so it expects the economy to continue to expand albeit at a slower pace.

Looking ahead to next year, the EU executive expects quarterly economic growth to gain momentum, thanks to a resilient labor market, moderating inflation, support from the Recovery and Resilience Mechanism and citizens’ savings.

Economy Commissioner Paolo Gentiloni already indicated in early April that Brussels would correct its economic forecasts for the beginning of the year to take into account the impact of the war in Ukraine, although he ruled out an economic recession.