Euro zone inflation eases to 10% in November as energy prices slow

Markets are monitoring the latest inflation data outside the euro zone ahead of the new ECB meeting.

Julian De Rosa | Afp | Good pictures

Inflation in the euro zone eased slightly in November, according to preliminary data on Wednesday, as prices came off a record high and missed analyst expectations.

Consumer prices have skyrocketed for months in the 19-member region. Inflation rose above the 10% mark last month, highlighting the severity of the coalition’s cost-of-living crisis.

Wednesday’s preliminary data from Europe’s statistics office showed annual inflation this month at 10% – marking a 0.6 percentage point drop from October.

Energy and food continued to contribute to higher inflation figures, but with a significant drop in the former. According to Eurostat, energy is expected to be at an annual rate of 34.9% in November, up from 41.5% in October.

“HICP inflation fell to 10.0% in November from 10.6% in October, the first decline since June 2021, and a bigger drop than originally expected,” Andrew Cunningham, chief European economist at Capital Economics, said in a note.

“We would not be surprised to see the inflation rate pick up again in December or January due to the volatility of the monthly numbers, but there is no doubt that it will come down faster next year,” he added.

The Euro vs. slightly abandoned British poundIt traded at £0.863, up 0.4 percentage points against the dollar US dollar $1.037 shortly after the figures were released.

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The easing in inflation comes after similar data from the US. Earlier this month, the October consumer price index came in below expectations.

Earlier this month, an ECB member told CNBC that peak inflation “is within reach.” Edward Scicluna, who is governor of Bank of Malta, told CNBC exclusively that he would not revisit the previous rate hike of 75 basis points as a result.

Market expectations point to a 50 basis point hike in rates in December.

ECB hikes

Low inflation figures may be a reflection of recent increases in interest rates and may indicate little or no rate hikes in the coming months. However, speaking earlier this week, the ECB President Lagarde It predicts further changes in its benchmark rate.

“We expect to raise rates further to the levels necessary to ensure inflation returns to our 2% medium-term target in time,” he told European lawmakers.

ECB bond sales tricky, economist says

The Central Bank It has raised rates three times this year and is expected to do so again in December. However, there is great uncertainty over how many rate hikes the ECB will announce next year.

Some economists argue that authorities should take a break to allow the real economy to react to higher rates, while others believe inflation is at too high a level to warrant further rate moves.

The ECB estimated in September that annual core inflation would reach 8.1% in 2022 and 5.5% in 2023. These figures are expected to be revised upwards when the central bank meets in December.

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