The drop in inflation was stronger than expected, but experts are not overly optimistic. The next meeting of the European Central Bank is held in February.
In December, consumer prices in the Eurozone rose by 9.2 percent in a year. This was the initial estimate of the statistical office Eurostat. The inflation rate in November was 10.1 percent, while in October it was 10.6 percent. Economists expected an even higher inflation of 9.7 percent.
According to Eurostat data, inflation has decreased for the second month in a row. Despite the decline, inflation is still more than four times the medium-term objective of the European Central Bank (ECB), which is two percent. Currency supervisors consider this level to be appropriate for the economy in the community of 20 member countries of the Eurozone.
Energy prices again drove inflation in December, although not as significantly. Energy prices have increased by 25.7 percent, compared to a year ago, although in November they had increased by a full 34.9 percent. Food, alcohol and tobacco prices rose 13.8 percent, up from 13.6 percent in November. Prices of non-energy industrial goods rose 6.4 percent in December. In November, the increase was 6.1 percent. Services grew by 4.4 percent in December.
The head of the ECB, Christine Lagarde, recently signaled that the European Central Bank will continue to raise interest rates in the new year. In the fight against high price pressure, the ECB raised its base interest rates by 0.50 percentage points in December. This happened after two high increases in September and October of 0.75 percentage points.
The ECB’s next interest rate meeting is on February 2. The Central Bank has raised interest rates four times in a row in just a few months. The deposit rate that is decisive in the financial markets is currently 2 percent.
