Eurozone inflation down to 1.4% in December
Inflation in the eurozone slipped further away from the European Central Bank’s target in December, highlighting the challenge facing the bank as it looks to maintain price rises while winding down its quantitative easing program this year.
Average consumer prices rose 1.4 percent year on year in December — down from 1.5 percent in November and in line with consensus forecasts, FT wrote.
Volatile energy, food and tobacco prices were the main drivers of the decline, with inflation in services remaining steady and industrial goods picking up slightly.
The ECB has made clear that it expects headline inflation to be weak in the coming months thanks largely to the impact of earlier rises in energy prices falling out of year-on-year calculations. However, Friday’s data showed core inflation also struggling to rise, remaining steady at 0.9 percent.
However, separate data on factory gate prices provided one potential area for optimism. Producer price inflation over the month of November was twice as strong as expected, at 0.6 percent, bringing the year on year rate to 2.8 percent. PPI tracks changes in the prices of goods bought and sold by manufacturers, and can be used as an early gauge of inflationary pressures that may be passed on to consumers later.