(Addition of quotes, other prices of bonds in the euro zone)

By Saikat Chatterjee and Abhinav Ramnarayan

LONDON, Oct. 22 (Reuters) – Eurozone inflation expectations among bond investors hit their highest level in years on Friday, putting additional pressure on the European Central Bank and its insistence on maintaining stimulus measures in a time of crisis.

Shortages of workers, fuel, freighters, semiconductors and building materials as the global economy rebounds after pandemic lockdowns have pushed companies from electric car makers to chocolate makers to scramble to bring control the costs.

Some of the world’s biggest brands are now passing higher prices on to consumers and warning all policymakers sitting on the inflationary barrier that things are going to get worse.

Germany’s 10-year breakeven inflation rate, which represents the difference in yield between a nominal bond and its inflation-linked counterpart, reached around 1.81%, the highest since April 2013.

A similar indicator in the United States remained at its highest level since August 2006 at 2.64%.

“What is also notable is that these higher inflation expectations are not simply focused on the next few years of the time horizon, since 5-year inflation swaps that examine expectations for the period of five years starting in five years have also seen substantial increases, ”said Jim Reid, chief strategist at Deutsche Bank.

He was referring to the five-year and five-year forward inflation swap, a key market indicator of long-term inflation expectations in the euro area, which was at its highest since September 2014 at 1.9489% on Friday. .

Global supply chain issues as the global economy reopens after COVID-19 closures and labor shortages have fueled pricing pressures. But unlike other major central banks like the US Federal Reserve and the Bank of England, policymakers in the single currency bloc have yet to make it clear that they will reverse the pandemic-era stimulus measures.

Rising inflation expectations also pushed nominal bond yields higher, with the 10-year Italian government bond yield hitting its highest level in five months at 0.973%.

Later on Friday, Markit’s initial Purchasing Managers Index (PMI) for the eurozone’s services and manufacturing sectors is expected to be released at 08:00 GMT, a key business survey that indicates the health of the euro area. ‘economy.

A Reuters poll showed expectations are for a composite reading of 55.2, where 50 is the level that separates the contraction from the expansion. (Reporting by Saikat Chatterjee and Abhinav Ramnarayan; editing by Emelia Sithole-Matarise)