Euro coins
(Picture: PA Archive)Eurozone inflation slowed more than expected in November, official data has shown, boosting hopes that the peak for double-digit price rises may be within sight and potentially opening the way for smaller interest rate hikes.
Consumer prices rose 10% on last year according to data from Eurostat, lower than October’s rise of 10.6% and lower than analyst expectations of 10.4%, according to estimates by the Reuters news agency.
Falling energy prices were responsible for most of the move, which will be welcomed by hard-pressed consumers, politicians and central bankers alike. The perils of inflation and the fight against it has been the main theme in markets and political centres across the world this year, and investors and policy makers are keeping close watch for any sign that soaring prices may have peaked.
Energy prices have been the main driver of inflation since Russia’s invasion of Ukraine sent the cost of gas and oil soaring, while the mild European winter has so far taken some of the sting out of the market.
The European Central Bank has already raised interest rates at record speed so far in 2022 and has its next policy meeting on December 15.
Bert Colijn, senior economist for the eurozone at Dutch bank ING, predicted that the ECB would move from rate hikes of 0.75% to 0.50%. Looking at the inflation numbers, he said: “We were due some good news. Whether this is the peak in inflation remains to be seen.”
Signs of stress remained in the data, with prices rises in processed food, alcohol and tobacco continuing to accelerate, reaching 13.6% from last month’s 12.4%.
Neil Shah, executive director at investment research group Edison, agree that a softer ECB hike was now in prospect, but added: ““Despite the good news, the fact that inflation remains in double figures and food prices continue to rise steadily will be worrying to households for the colder months ahead, while central banks will have to act with consideration to avoid accelerating a recession.”
