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Euro zone inflation accelerates to 2.4% in December
Euro zone annual inflation rose for a third straight month to 2.4% in December from 2.2% in November, data from the European statistics agency Eurostat showed.
Core inflation held steady at 2.7% for a fourth straight month, also in line with economists’ expectations, while services inflation rose to 4% from 3.9%.
Headline inflation had been widely expected to accelerate after hitting a low of 1.7% in September, as the base effects of lower energy prices fade.
The full extent of the increases in the reading – along with continued services and core inflation – will be closely watched by the European Central Bank, which currently expects to cut interest rates from 3% to 2% over several cuts this year.
The pace of price increases in the euro zone’s largest economy, Germany, was 2.9% in December, higher than expected, according to figures released separately this week. Meanwhile, inflation in France came in at 1.8% last month, below the 1.9% forecast in a Reuters poll of analysts.
Haig Bathgate, director of Calanish Capital, told CNBC that ECB policymakers would not be overly concerned by the hotter monthly inflation reading, as long as it was broadly in line with expectations.
“There is now more predictability in a lot of the data series that we see … the direction of [lower] interest rates in Europe is more predictable than in the U.K. for example,” Bathgate said Tuesday.
