Log in
Show password
Forgot password ?
Become a member for free
Sign up
Sign up
New member
Sign up for FREE
New customer
Discover our services
Dynamic quotes 
News: Latest News
Latest NewsCompaniesMarketsEconomy & ForexCommoditiesInterest RatesBusiness LeadersFinance Pro.CalendarSectors 
All NewsEconomyCurrencies & ForexEconomic EventsCryptocurrenciesCybersecurityPress Releases

House prices a persistent pressure on euro zone inflation, ECB study shows

09/21/2021 | 06:48am EDT
FILE PHOTO: Facades of apartment buildings with micro apartments are pictured at Mitte district in Berlin

FRANKFURT (Reuters) - House prices, now excluded from euro zone inflation data, would have persistently raised consumer prices in recent years, a study published by the European Central Bank showed on Tuesday, highlighting policymakers' unease with the current indicator.

Once corrected for housing costs, euro zone inflation would have hit or even exceeded the ECB's target some years, even as the bank was providing extraordinary stimulus to raise prices, figures from the study showed.

The paper, part of the ECB's recent strategy review, concluded that housing costs would have led to "persistently higher" inflation since around 2014 and between 2018 and 2020, inflation would have been around 0.2-0.3 percentage points higher.

Graphic: Euro area inflation vs house price growth:

The ECB stopped asset purchases, commonly known as quantitative easing, at the end of 2018 and the figures on housing prices appear to support the argument of conservative policymakers at the time that inflation developments would have allowed for an earlier exit.

Although the ECB does not calculate inflation data, it said in July that it would consider estimates on the cost of owner-occupied housing on inflation until Eurostat, the EU's statistics agency, fixes the broader measure.

Graphic: Euro yone inflation corrected for house price growth:

Over two decades, however, the adjusted inflation figure would have been little different, the study argued, as housing costs could have been a drag on prices.

Still, policy hawks argue that exceptionally low interest rates put an upward pressure on house prices, so this pressure on inflation is likely to persist for years to come and data used to calibrate policy, are not capturing this.

The paper added that experimental, quarterly inflation figures with housing included could be published in 2023 while official quarterly data are not expected until 2026.

(Reporting by Balazs Koranyi; Editing by Emelia Sithole-Matarise)

© Reuters 2021
Stocks mentioned in the article
ChangeLast1st jan.
AUSTRALIAN DOLLAR / EURO (AUD/EUR) -0.10% 0.64419 Delayed Quote.2.01%
BRITISH POUND / EURO (GBP/EUR) 0.04% 1.18658 Delayed Quote.5.96%
CANADIAN DOLLAR / EURO (CAD/EUR) 0.03% 0.696471 Delayed Quote.8.14%
INDIAN RUPEE / EURO (INR/EUR) -0.01% 0.011471 Delayed Quote.2.12%
US DOLLAR / EURO (USD/EUR) 0.07% 0.858811 Delayed Quote.5.02%
Latest news "Economy & Forex"
10:35aExiled Afghan Artist Paints Without Arms or Legs – Inspires Hero Award
10:00aTRACKINSIGHT : HODLX Crypto basket is up more than 38% since late September debut
09:37aVC DAILY : ShouTi Lands $100 Million to Develop -2-
09:37aVC DAILY : ShouTi Lands $100 Million to Develop Pills for Chronic Diseases
09:14aIndia PM Modi to attend Glasgow climate meet, environment minister says
08:58aCHINA EVERGRANDE : Stocks stall, oil cools, Evergrande and lira mauled
08:58aFed's Quarles Warns of Extended High Inflation; Paycheck Protection Program May Have Made Inequality Worse, Minneapolis Fed Chief Says
08:55aE-commerce AI Leader Fanplayr Announces Strategic Appointments to Support Growth in US and APAC
08:53aCanada to Issue Travel Certificate Verifying Covid-19 Vaccination
08:39aIndian court proposes Zee call shareholder meeting in win for Invesco
Latest news "Economy & Forex"