Eurozone inflation returned to the 2% trajectory in October and much of the blame lies with Germany. The region’s consumer price index (CPI) exceeded this month from 1.7% over one year in September to 2%. Even though the new data continues to respect the 2% target set by the European Central Bank (ECB), it comes with less positive details: the underlying indicator (neither energy, nor food, nor alcohol, nor tobacco) remains high at 2.7% although even a slight drop was expected. Another worrying section is once again the services inflation, which remains at a still abrasive level of 3.9% over one year. These data constitute a warning for an ECB which has just approved an aggressive policy of lowering rates. Inflation and growth figures released this week are a departure from the Eurobank’s 50 basis point “jumbo” cut in December.
The increase of three tenths in the general indicator is known 24 hours after the harmonized CPI of Germany (the one used to calculate the euro zone by Eurostat) was an unpleasant surprise with a jump from 1.8% to 2.4% over one year. A jump which, in an economy like that of Germany, the largest in the region, has affected global data. The increase recorded in Belgiumfrom 4.3% to 4.7%.
