(RTTNews) - Eurozone annual inflation turned positive in November after staying in the negative territory for five straight months.

Annual inflation in the 16-nation bloc stood at 0.6% in November, reversing the 0.1% decline in the previous month, a flash estimate from the Eurostat showed Monday. This was slightly faster than the 0.5% rise expected by economists. The statistical office is scheduled to issue the final CPI figures on December 16.

The European Central Bank aims to keep inflation rates below, but close to 2% over the medium term. Earlier this month, ECB President Jean-Claude Trichet said the central bank avoided the materialization of deflationary risks. He said inflationary pressures over the medium term are low. Medium to longer-term inflation expectations remain firmly anchored in line with the central bank's target.

Prices rose in November due to energy-price base effects. Economists expect inflation to accelerate further as energy base effects unwind as well as due to projected rise in commodity prices. On the other hand, core inflation is expected to continue to ease.
Marco Valli, a UniCredit economist said food inflation likely was off the October low but remained deeply in negative territory. "Most likely, inflation will keep rising in December, approaching the 1% area." However, the economist expects a downward revision to today's preliminary figure.

The next ECB monetary policy meeting is due on December 3. In November's Governing Council meeting, the central bank had left its interest rate unchanged at a record low of 1% and gave a strong indication that it is preparing to rollback unconventional measures to mop up excess liquidity from the Eurozone economy. BNP Paribas expects the ECB to leave the refi rate unchanged for an extended period of time.

Although inflation is set to increase further in the months ahead, it is likely to stay comfortably below the ECB's medium-term target, ING's Martin van Vliet said. The economist noted that inflation outlook means that while the central bank may be on the verge of scaling back some of its emergency liquidity operations, official rate increases remain a distant prospect.

Eurozone inflation is not expected to rise significantly in 2010, European Central Bank Governing Council member Ewald Nowotny said in an interview last week. The central banker said excess liquidity in the financial system will be removed once the ECB's non-standard policies expire.

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