February 9, 2023

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Eurozone inflation eased to 10% in November as energy prices slowed

Eurozone inflation eased to 10% in November as energy prices slowed

Markets track the latest inflation data from the Eurozone ahead of the new European Central Bank meeting.

Julian De Rosa | Afp | Getty Images

Inflation in the eurozone slowed slightly in November, according to preliminary figures released on Wednesday, as prices fell from record highs and missed analysts’ expectations.

Consumer prices have skyrocketed across the 19-country region for several months now. Inflation rose above the 10% mark last month, highlighting the severity of the cost-of-living crisis in the bloc.

Preliminary data released on Wednesday from the European Statistical Office showed that headline inflation hit 10% annually this month – down 0.6 percentage points from October.

Energy and food continued to contribute to the high inflation figures, but with previously marked declines. Energy is expected to have stabilized at an annualized rate of 34.9% in November, compared with 41.5% in October, according to Eurostat.

“The decline in HICP headline inflation from 10.6% in October to 10.0% in November was the first decline since June 2021 and was a larger drop than originally expected,” Andrew Kenningham, chief European economist at Capital Economics, said in a note.

“We wouldn’t be surprised to see the headline inflation rate pick up again in December or January given the volatility in the monthly figures, but there is no doubt that it will fall quickly next year,” he added.

The euro slightly decreased vs British poundtrading at 0.863 pounds sterling, and rose by about 0.4 percentage points against U.S. dollar at $1.037 shortly after the figures were released.

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The decline in inflation follows a similar set of data from the United States. Earlier this month, the consumer price index for October came in below expectations.

Earlier this month, a member of the European Central Bank told CNBC that a peak in inflation is “at hand.” Edward Scicluna, who is also governor of the Bank of Malta, told CNBC EXCLUSIVELY that as a result he did not see a repeat of the previous 75 basis point interest rate hike.

Market expectations are for a 50 basis point increase in prices in December.

ECB hikes

Lower inflation numbers may be a reflection of recent interest rate increases and may mean more or less higher rates in the coming months. However, speaking earlier this week, the European Central Bank President Lagarde Expect more changes to its benchmark price.

“We expect to raise interest rates to the levels required to ensure that inflation returns to our medium-term target of 2% in due course,” she told European lawmakers.

The central bank It has raised interest rates three times this year and is expected to do so again in December. However, there is a great deal of uncertainty about the number of interest rate increases the ECB will announce in the coming year.

Some economists argue that officials will have to take a break to allow the real economy to react to the higher rates, while others believe that inflation is at such high levels that it needs more price movements.

The European Central Bank estimated in September that annual headline inflation would be 8.1% for 2022 and 5.5% in 2023. These figures are expected to be revised upward when the central bank meets in December.