Euro-zone in­fla­tion hits 31-month high

Kuwait Times - - BUSINESS -

Euro-zone in­fla­tion rose to a two-and-half-year high in Novem­ber as Europe moved fur­ther away from the very low con­sumer prices that have put an al­ready frag­ile eco­nomic re­cov­ery un­der threat. The level matched fore­casts by an­a­lysts and will come as a re­lief to the Euro­pean Cen­tral Bank which has em­barked on a highly con­tro­ver­sial and mas­sive stim­u­lus pro­gram to boost in­fla­tion. The Euro­stat sta­tis­tics agency yes­ter­day said con­sumer prices in the 19-coun­try cur­rency bloc rose by 0.6 per­cent this month, the first time it has hit that level since April 2014. The euro-zone’s ul­tra-low in­fla­tion is a huge worry for the ECB, where the goal is to keep in­fla­tion near 2.0 per­cent.

In­fla­tion re­flects un­der­ly­ing con­sumer de­mand in the econ­omy and while still edg­ing higher this month, 0.6 per­cent means Europe is short of a full-fledged re­cov­ery. An­a­lyst Howard Archer said that core in­fla­tion-stripped of highly volatile food and oil prices-still re­mained far too low at 0.8 per­cent. “The muted Novem­ber core in­fla­tion data high­light that the ECB can­not re­lax on the in­fla­tion front yet, even if the head­line rate looks primed to rise ap­pre­cia­bly over the next few months,” Archer of IHS Global In­sight wrote. World oil prices have crept up in re­cent months, snap­ping a long de­cline that desta­bi­lized the global econ­omy and brought a spell of de­fla­tion to Europe. ECB chief Mario Draghi ear­lier this month said the euro-zone’s ten­ta­tive re­cov­ery re­mained heav­ily re­liant on the bank’s mon­e­tary boost, fu­elling ex­pec­ta­tions of more stim­u­lus to come. — AP

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