Euro Area: Pace of decline in annual prices stable in November

Euro Area Inflation November 2020

Euro Area: Pace of decline in annual prices stable in November

Harmonized consumer prices fell 0.3% compared to the same period of the previous year in November, matching October’s decrease. Inflation thus remained below the European Central Bank’s target rate of near, but under, 2.0%. November’s drop was due a sharp fall in prices for energy and to somewhat lower prices for non-energy industrial goods. On the other hand, prices for services and for food, alcohol and tobacco rose.

On a monthly basis, harmonized prices dropped 0.3% in November, contrasting October’s 0.2% rise. Core inflation, which excludes volatile energy and unprocessed foods prices, was stable at October’s 0.4% in November.

A complete set of data for harmonized inflation will be released on 17 December.

Commenting of the release, Bert Coljin, senior Eurozone economist at ING, stated:

“The overall trend is clear, inflation will remain depressed. With a vaccine around the corner, there is room for recovery but unemployment has been trending up, which makes the outlook for inflation recovery slow at best. The lengthening of lockdown measures into December or in some cases even January certainly does not help. Given that core inflation is stubbornly low and will recover even more slowly than previously expected due to the second lockdown- this will be reflected in the macroeconomic projections that the ECB will present next week. As this has been the base case for some time now, it will without a doubt make the ECB loosen policy once again.”

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