Euro-zone inflation hits 31-month high
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