Annual inflation in the eurozone stood at 2.9% in December, compared with 2.4% in November, and analysts expect it to remain high early this year, Reuters reported, as quoted by Agerpres.
The figure announced by Eurostat is slightly different from the estimates of analysts, who expected an inflation rate of 3% after the withdrawal of some state subsidies.
Growth rates for food, alcoholic beverages and cigarettes remain strong (6.1% in December after rising 6.9% in the previous month), followed by services (up 4%, relatively stable since November) and manufacturing industry (2.5% in December versus 2.9% the previous month).
In contrast, energy prices fell 6.7% (after falling 11.5% in November), for the eighth month in a row.
Core inflation, which leaves out prices for volatile goods such as energy and food, eased to 3.4% in December from 3.6% in November. Core inflation is a measure that the ECB monitors closely when developing its monetary policy decisions.
The ECB aims for inflation to be 2% by the end of 2025 and stagnate at around 3% for most of next year. In December, the ECB forecast inflation in the fourth quarter of 2023 at 2.6%.
The ECB is unlikely to lower interest rates
The next ECB monetary policy meeting is scheduled for January 25, and analysts do not expect interest rates to change. At the last meeting on monetary policy, the “guardians” of the euro left the base interest rate unchanged, at the historical level of 4%.
Investors expect the ECB to start cutting interest rates in the spring of 2024 amid slowing economic growth.
Some analysts warn that over the past year and a half, interest rates have been raised too much and credit is becoming so tight that it could deepen the recession or slow the recovery.
Meanwhile, the eurozone economy is beginning to feel the effects of the tightening of monetary policy. Eurozone gross domestic product shrank in the third quarter, and companies believe a recession is increasingly possible.
Instead, economists believe that the Eurozone will avoid such a scenario as much as possible by stagnating in the fourth quarter.
Source: Hot News
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