Inflation in Europe falls for the first time in 17 months | Popgen Tech
For the first time in 17 months, inflation is decreasing in Europe.
Consumer prices rose by 10% in the year to November, according to the first look at official data for the 19 countries that use the euro. That’s down from a record jump of 10.6% the previous month, and below economists’ expectations.
In Germany, the bloc’s biggest economy, annual inflation fell to 11.3% from 11.6%, while price rises in France held steady at 7.1%, Wednesday’s data showed. Inflation in Italy eased to 12.5% from 12.6%, while Spain saw a bigger drop, to 6.6% from 7.3%.
However, prices continue to climb at an uncomfortably rapid discount, driven by the rising cost of energy and food.
While energy price inflation fell to around 35% year-on-year, down from nearly 42% in October, prices for food, alcohol and tobacco continued to rise sharply. They jumped 13.6% in November, up from 13.1% the previous month.
And core inflation, which excludes volatile food and energy prices, held firm at 5%.
But euro zone data supported hopes that inflation in many top economies may have peaked, allowing central banks to dial back aggressive interest rate hikes that are putting pressure on the global economy. Consumer prices in the United States rose 7.7% in the year to October, the lowest annual reading since January.
“The fact that we see these numbers are lower than most of us expected, that’s good news,” said Bert Colijn, senior eurozone economist at ING. “You have to start somewhere.”
Oil prices have fallen sharply since the summer as recession fears and coronavirus lockdowns in China changed the outlook for demand. Natural gas prices in Europe also fell to all-time lows following a successful campaign to fill storage facilities and due to relatively mild weather heading into winter.
Double-digit inflation remains a major concern for policymakers, who have indicated they will continue efforts to bring prices under control. Still, the November figures could give the European Central Bank room to raise rates by half a percentage point instead of by three-quarters of a percentage point when it meets next month.