The European Central Bank says the eurozone risks facing “inflationary psychology”. What this means

Once the psychology of inflation sets in, consumers are outpacing their spending to cope with rising prices, while businesses are starting to raise their own prices, expecting higher costs, with both behaviors perpetuating inflation. Reuters.

We currently have very high inflation rates, and clearly we could be in a world where inflationary psychology is setting in.“Lane said at the annual dinner of the Society of Professional Economists in Britain, which was held in London.

Euro area inflation was 8.1% at the end of May.

Inflation has risen in recent years as a result of anti-epidemic restrictions and financial assistance programs to stimulate economic recovery. In recent months, sanctions imposed on Russia by the European Union over military intervention in Ukraine have also had significant effects on inflation.

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