Inflation rises further in December
Complete data revealed harmonized inflation accelerated to 1.3% in December from November’s 1.0% and matched the preliminary estimate. Despite the pick-up, the result is still below the European Central Bank’s target rate of near, but under, 2.0%. December’s acceleration was due to a rebound in energy prices as well as to faster price increases for unprocessed food, while the increase in prices for services moderated marginally.
On a monthly basis, harmonized prices rose 0.3% in December, contrasting November’s 0.3% fall. Core inflation, which excludes volatile energy and unprocessed foods prices, was stable at November’s 1.4% in December.
Commenting the inflation print, Bert Colijn, Eurozone senior economist at ING, highlighted:
“Despite a strong increase in inflation […] in December, it’s premature for hawks to get excited. […] Predictions for a sustained rise in core inflation still seem premature, as wage pressures have been moderating recently thanks to the sluggish and uncertain economic environment. The same holds for selling price expectations which have been trending down, indicating that more modest price growth is in the making in the months ahead”.