Inflation rose again in December in the euro zone. Prices increased by 2.9% year-on-year in the last month, five tenths more than in November, according to figures published this Friday by Eurostat.
You have to go back to April 2023 to find the last price increase in the single currency area, which has had seven months of uninterrupted falls. The rebound gives more reasons to the European Central Bank (ECB) to hold out for the first rate reduction, since the goal of an inflation rate of around 2% still seems far away.
The rebound “reminds us that a rate cut is unlikely in the first quarter, but should not dispel expectations of cuts later in the year,” estimates Bert Colijn, economist at ING bank. For Jack Allen-Reynolds, of Capital Economics, the acceleration in prices in December “will not change the monetary policy perspectives of the ECB leaders.”
Core inflation, which does not take into account fresh food and energy, remains at 3.4%, two tenths less than in November. The ECB is closely monitoring the evolution of the data, once again above the target.
In detail, there is an increase in prices in the food, alcohol and tobacco group, which rises by 6.1% due to weather conditions, the 4% increase in services or the 6.7% decline in energy, far from the previous 11.5% in this case. Also weighing is the increase in inflation in Germany by nine tenths, to 4%.
The withdrawal of consumer support measures, such as aid on electricity bills, and base effects may provide more surprises in January and throughout the year, with a more moderate fall in inflation.
Among the euro countries, inflation rose in December in nine cases, remained unchanged in one, Spain, and fell in a dozen. The most notable price increase occurs in Slovakia, with 6.6%, compared to 5.7% in Austria and 5.4% in Croatia. Spain is in a medium band (3.3%), along with Germany (3.8%) or France (4.1%). At the bottom are Belgium and Italy (0.5%) and Latvia (0.9%).
“Apart from energy, all other components continued their disinflationary trend. Although some, such as food, remain high and subject to some volatility, the disinflation dynamic remains quite clear,” said Nicola Nobile of Oxford Economics. .
