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Eurozone Inflation Highest Since 2013

By RTTNews Staff Writer   ✉  | Published:  | Google News Follow Us  | Join Us
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Eurozone inflation rose at the fastest pace in more than three years at the end of 2016 on higher energy and food prices.

Inflation increased more-than-expected to 1.1 percent in December from 0.6 percent in November, flash data from Eurostat revealed Wednesday.

Inflation was expected to rise to 1 percent. A similar higher rate was last seen in September 2013.

Nonetheless, headline inflation was below the European Central Bank's target of 'below, but close to 2 percent', where it has been since early 2013.

At the same time, core inflation that excludes energy, food, alcohol and tobacco, rose only slightly to 0.9 percent from 0.8 percent. Final data is due on January 18.

Energy prices advanced 2.5 percent, reversing a 1.1 percent drop in November and food price inflation accelerated to 1.2 percent from 0.7 percent.

Inflation is likely to continue rising in the coming months, but that does not mean that the ECB is getting behind the curve, Bert Colijn, an ING economist, said.

December's jump in Eurozone inflation and the prospect of more to come will likely fuel debate about whether the ECB's current monetary policy stance is appropriate and whether it should think about further cutting back on its monthly asset purchases, IHS Markit economist Howard Archer said.

Archer noted that the jump in Eurozone inflation could have some limiting impact on Eurozone growth by diluting consumers' purchasing power.

All major economies that released preliminary inflation data showed an acceleration in price growth.

Germany's inflation was 1.7 percent in December versus 0.7 percent in November. Elsewhere, France's inflation increased slightly to 0.8 percent from 0.7 percent in November.

Italy's inflation climbed to 0.5 percent from 0.1 percent in November. Likewise, Spain's inflation rose to 1.4 percent from 0.5 percent.

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