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Eurozone Inflation Rises, Jobless Rate Lowest Since 2009

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Eurozone inflation increased in November, largely due to higher energy prices, flash data from Eurostat showed Thursday, supporting the cautious approach adopted by the European Central Bank.

The unemployment rate in the 19-nation currency bloc reached its lowest level in more than eight years in October as improving economic conditions generated more jobs.

Consumer prices advanced 1.5 percent year-on-year in November, following October's 1.4 percent increase, flash data from Eurostat showed Thursday. Inflation was forecast to rise to 1.6 percent.

Nonetheless, inflation continues to stay well below the ECB's target of 'below, but close to 2 percent'.

Excluding energy, food, alcohol and tobacco, core inflation held steady at 0.9 percent in November.

Data showed that food, alcohol and tobacco prices rose 2.2 percent, slightly slower than the 2.3 percent increase seen a month ago. Meanwhile, growth in energy prices accelerated to 4.7 percent from 3 percent.

Non-energy industry goods prices grew 0.4 percent for the second straight time and services charges rose again by 1.2 percent.

Among big-four euro area economies, Germany's HICP inflation climbed to 1.8 percent from 1.5 percent in October. France's inflation rose marginally to 1.3 percent from 1.2 percent.

HICP inflation held steady at 1.7 percent in Spain and at 1.1 percent in Italy.

Another report from Eurostat showed that the unemployment rate in the currency bloc slid to 8.8 percent in October from 8.9 percent in September.

This was the lowest since January 2009. The rate was forecast to remain unchanged at 8.9 percent.

The number of unemployed decreased by 88,000 from the previous month to 14.344 million. Compared to the previous year, unemployment fell by 1.473 million.

Although the youth unemployment rate dropped marginally in October, it remained at an elevated 18.6 percent in October compared to 18.7 percent in September.

Data from Germany's Federal Labor Agency revealed that unemployment in the biggest euro area economy declined by a more-than-expected 18,000 in November from October.

At the same time, the jobless rate held steady at 5.6 percent in November, the lowest since the German reunification in 1990.

November's rise in headline Eurozone consumer price inflation and the fall in the unemployment rate in October may offer some reassurance to the ECB as it prepares to reduce the pace of its asset purchases, Jennifer McKeown, an economist at Capital Economics, said.

But the still-low rate of core inflation supports the bank's cautious approach, the economist added.

by RTT Staff Writer

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