Eurozone housing costs may be spurring inflation more than expected: Holzmann

Commuter trains will pass through the skyline along with the financial district prior to the European Central Bank’s (ECB) board meeting on October 25, 2021 in Frankfurt, Germany. (Kai Pfaffenbach / Reuters)

Vienna — Housing costs could increase eurozone inflation more than previously thought, European Central Bank policymaker Robert Holzmann said Friday, which has been the focus of policymakers this year. Emphasis was placed on important issues.

When asked how much the cost of owning a home could increase headline inflation, Austria’s central bank governor Holtzmann said it could increase by as much as 0.5 percentage points. rice field.

“I’ve heard 0.5 (percentage points),” he told reporters. “It’s not a little.”

Homeowners are not currently included in the most widely used inflation index, called the Consumer Price Index (HICP). This is an abbreviation that the ECB has long complained about.

ECB staff estimate that, including housing costs, inflation will lead to “permanently high” inflation from around 2014, with inflation rising by about 0.2 to 0.3 percentage points between 2018 and 2020.

However, some argue that the contribution of housing costs to inflation is increasing as persistently low interest rates are pushing up house prices.

ECB policymakers agreed earlier this year to take into account measures that include an initial estimate of homeownership costs, while inflation has been revised to include housing costs.

When asked how long it would take to change the inflation index to reflect housing costs, Holtzmann added: