Euro Area: Inflation falls more than expected in November

Euro Area Inflation November 2023

Euro Area: Inflation falls more than expected in November

Harmonized inflation fell to 2.4% in November from 2.9% in October. The print represented the lowest rate since July 2021 and surprised markets on the downside. Therefore, inflation moved closer to the European Central Bank’s target rate of 2.0%.

November saw weaker increases in prices for non-energy industrial goods, services and food, alcohol and tobacco. Moreover, prices for energy declined at a sharper pace. Meanwhile, the annual rate of core inflation—which excludes volatile energy and unprocessed food prices—declined to 4.2% in November from October’s 5.0%.

On a monthly basis, harmonized consumer prices fell 0.5% in November, below October’s 0.1% increase.

Commenting on the impact of the latest inflation reading on the future course of monetary policy, Bert Colijn, senior economist at ING, stated:

“For the ECB, signs of an imminent victory on inflation are mounting. The central bank worries about factors like wage growth and possible spikes in the energy market that could put inflation on a higher path again. But current monetary policy is sufficiently restrictive as bank lending data out earlier this week showed that the effects of higher rates are impacting lending significantly.”

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