Inflation Pressures Set to Mount

The euro area’s closing the production gap and opening the gates for price increases

The euro-area economy should finally get some inflation pressure as it uses up its spare productive capacity next year. After five years of beating the so-called potential growth rate the economy can manage long-term, the 19-nation bloc won’t have an output gap for the first time since the financial crisis, according to projections from the European Commission. Inflation is seen accelerating to 1.7 percent in the fourth quarter of 2019 from 1.2 percent at the start of 2018.

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