LONDON - Inflation expectations in Germany climbed to 8-1/2 year highs on Friday as concerns grew that the European Central Bank will keep monetary policy on a dovish setting next week in the face of rising inflation data.

German 10-year breakeven inflation rate which represents the difference in yield between a nominal bond and its inflation-indexed counterpart rose to around to 1.81%, highest since April 2013, according to Refinitv data.

The surge in inflation expectations follows weeks of increases in energy prices with natural gas and coal prices hitting record highs amid supply constraints and rebounding demand for electricity.

Global supply chain problems as the world economy reopens from COVID-19 lockdowns and labour shortages have also fuelled price pressures.

But unlike some other major central banks like the U.S. Federal Reserve, policymakers in Europe are unlikely to abandon its pandemic-era stimulus settings yet.

A similiar gauge in the United States held at its highest level since August 2006 at 2.64%.

(Reporting by Saikat Chatterjee, editing by Stefano Rebaudo and Abhinav Ramnarayan) ((; +44-20-7542-1713; Reuters Messaging: