Euro zone inflation rose by three tenths in November due to a smaller fall in energy prices, reaching 2.3%, according to preliminary data published this Friday by Eurostat, the Community statistics office. The CPI thus once again slightly exceeds the objective of 2% equivalent to price stability set by the European Central Bank (ECB).
For its part, underlying inflation – which excludes energy, food, alcohol and tobacco, the most volatile elements – remained unchanged at 2.7% in November. It’s a key structural indicator for the ECB when it decides on interest rates.
If we analyze the main components of the harmonized Eurozone CPI, services This is the factor that increased the most last year (3.9% in November, compared to 4% in October). In second place come food, alcohol and tobacco (which slowed from 2.9% in October to 2.8% this month).
Prices of industrial products excluding energy increased by 0.7% (compared to 0.5% in October). But the main factor that explains the inflationary rebound is that energy prices fall at a rate of 1.9% compared to the previous year, compared to the 4.6% decline in October.
Among the large Eurozone countries, Spain and Italy suffered the largest increase in inflation in November, by six tenths in both cases, recording a harmonized CPI of 2.4% and 1.6% respectively. In Germany, inflation remained stable at 2.4%, while in France it increased by a tenth (from 1.6% to 1.7%).
In November, the Member States with the highest inflation were Belgium (5%), Croatia (4%), as well as Estonia and the Netherlands (3.8% each). The lowest price increases were recorded in Ireland (0.5%), Luxembourg and Lithuania (1.1%) as well as Slovenia and Italy (1.6%).
Despite this rise in inflation, analysts estimate that ECB to cut interest rates for the fourth time at its next meeting on December 12, after the reductions made in July, September and October. The reference rate which now guides the direction of monetary policy (which is the rate applicable to the deposit facility) is 3.25%.
In a recent interview, the vice-president of the ECB, Luis de Guindosadmitted that “concerns about high inflation have transferred to economic growth.” “The trajectory of our monetary policy is clear: if our projections are confirmed, We will continue to make our monetary policy less restrictive“, announced Guindos.
“Our mandate is price stability. Monetary policy may affect growth in the short term, but we focus on inflation in the medium term. That said, to achieve price stability we take into account developments the economy in general and domestic demand. Low growth is one of the main risks today” warns the vice-president of the ECB.
