The European Central Bank (ECB) is not being impressed by rising raw material and energy prices.

For them, inflation continues to be temporary.

This was confirmed on Monday by the head of the Italian central bank, Ignazio Visco, in an interview with Bloomberg TV.

Almost at the same time, the ADAC reported that the daily average price of a liter of diesel at German petrol stations was 1.555 euros, higher than ever before.

With a price of 1.667 euros for a liter of E10 Super, petrol also approached the record of 1.709 euros set on September 13, 2012.

Markus Frühauf

Editor in business.

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ECB Council member Visco admitted price pressure, but referred to the as yet unobservable second-round effects such as higher wage settlements. Since energy prices are rising across the board, not just at petrol stations, but also for heating, this increases the pressure on politicians. The higher prices reduce purchasing power in the lower income brackets, which can put a strain on economic growth through lower consumption.

The new Japanese Prime Minister Fumio Kishida instructed his cabinet on Monday to flexibly initiate the necessary steps.

In his opinion, should be advertised among the oil producers for higher production.

In view of the sharp rise in energy prices, EU Labor Commissioner Nicolas Schmit warned against more energy poverty in Europe.

There are already millions of people who suffer from it, "and this number could get even bigger," he told the German press agency.

Worries about energy poverty

Although the EU Commission can help EU countries to limit the effects of the current high energy prices on people, it is primarily up to national governments to take action. For this reason, Thuringia's Minister of Economic Affairs, Wolfgang Tiefensee (SPD), spoke out in favor of one-off financial relief for low-income households. The political discussion can also fuel the pressure in the upcoming collective bargaining negotiations and lead to higher wage settlements.

The supporters of a continued loose monetary policy in the ranks of the ECB can still rely on the moderate inflation expectations in the financial markets. In the markets, the break-even inflation rate, i.e. the yield difference between a normal and an inflation-indexed federal bond, is estimated to be an average of 1.84 percent over the next five years. Inflation expectations have risen significantly recently, in July they were still below 1.2 percent. Nevertheless, they are still compatible with the inflation target of 2 percent on average by the ECB, especially since a temporary overshoot should be tolerated.

The US Federal Reserve (Fed) is pursuing a similar inflation target. But in the United States, inflation expectations over the next five years are 2.7 percent, already above the 2 percent mark. There the Fed is already preparing the markets to curb their bond purchases. In Great Britain, a key rate hike is even expected at the end of the year. The head of the Bank of England, Andrew Bailey, sent an unequivocal signal on Sunday that monetary policy was forced to act if it feared inflation risks in the medium term.

Bailey also considers the price pressure to be mostly temporary after the lockdown measures in the previous year had depressed prices.

However, he is concerned about the significant rise in energy prices, which can lead to higher inflation expectations on the markets.

In New Zealand, where the central bank was one of the first to raise interest rates, inflation rose to 4.9 percent in the third quarter, the highest level in ten years.

And it's not just energy prices that are rising.

Other raw materials are also becoming more and more expensive, although industrial production is currently being affected by supply bottlenecks.

The price of aluminum was on Monday at $ 3,229 per ton, as high as it was more than 13 years ago.

The reason is a supply bottleneck because the energy shortage in China is causing lower aluminum production.