Eurozone inflation eased slightly as expected at the end of 2017 on slower growth in energy prices, suggesting that an interest rate hike from the European Central Bank is likely to be a long way off.
Inflation eased marginally to 1.4 percent in December from 1.5 percent in November, flash data from Eurostat showed Friday. The rate came in line with expectations.
Inflation remains below the ECB’s target of ‘below, but close to 2 percent’.
Excluding energy, food, alcohol and tobacco, core inflation held steady at 0.9 percent in December, while it was forecast to rise to 1 percent. Final data is due on January 17.
Looking ahead, there are signs that underlying price pressures are starting to build, Jessica Hinds, an economist at Capital Economics, said. Accordingly, the ECB will feel increasingly comfortable that it can end its asset purchase programme by the end of 2018.
But with inflation set to remain below the 2 percent ceiling, the ECB is likely to stick to its guidance that it will not raise interest rates any time soon, the economist noted.
In December, the ECB staff raised its inflation forecast for 2018 to 1.4 percent from 1.2 percent. The projection for 2019 was retained at 1.5 percent. The bank saw inflation at 1.5 percent in 2020.
Among big-four economies, EU harmonized inflation in Germany eased to 1.6 percent from 1.8 percent. Likewise, Spain’s inflation came in at 1.3 percent versus 1.8 percent a month ago.
Italy’s inflation slowed to 1.0 percent from 1.1 percent rise in November. Meanwhile, France’s inflation rose to 1.3 percent from 1.2 percent in the previous month.
Data showed that euro area food, alcohol and tobacco prices increased 2.1 percent annually after rising 2.2 percent in November. Energy price inflation slowed to 3 percent from 4.7 percent.
Non-energy industrial goods prices gained 0.5 percent after rising 0.4 percent. At the same time, the annual increase in services remained at 1.2 percent.
The material has been provided by InstaForex Company – www.instaforex.com
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