High inflation likely to start declining in 2022, says Eurogroup head

'Issue of rising energy prices is broad, it is multifaceted,' Paschal Donohoe says

Eurogroup President Paschal Donohoe said on Monday he expects high inflation to start declining in 2022.

He was speaking at a meeting in Luxembourg that was attended by finance ministers of the euro area.

The social impact of the current increase in prices affects vulnerable households, small and medium-sized businesses, Donohoe, who is also Ireland's finance minister, said at the meeting that discussed macro-economic developments in the euro area, including inflation and energy prices.

"So that's why we agreed on the need to monitor the evolution of energy prices and to factor this into our budgetary policy-making to ensure it doesn't compromise the recovery that is now taking hold," he said.

"The issue of rising energy prices is broad and it is multifaceted ... The euro area economy continues to be bouncing back strongly. Recent data releases show that the euro area is doing well," he added.

Donohoe said Christian Zinglersen, the director of the EU Agency for the Cooperation of Energy Regulators, joined the meeting to provide an update on energy prices, recent developments regarding inflation and energy prices.

Euro area inflation in September climbed to a 13-year high with 3.4%, according to a flash estimate released on Friday by Eurostat, the statistical office of the EU.

Oil prices have climbed to their highest level in three years as normalization from the pandemic have created a surge in global oil demand, while overall crude supply remains limited.

Natural gas prices in Europe hit a fresh record of €100 ($116) megawatt per hour by late September, a six-fold increase in less than a year when it stood at €16 megawatt per hour in early January, which poses a great risk against economic recovery and heating before the winter season.