Eurozone Inflation Slows To 4-Month Low

Eurozone consumer price inflation slowed to a four-month low in December after energy price growth eased for the second straight month, preliminary data from Eurostat revealed Friday.

Consumer price inflation slowed more-than-expected to 9.2 percent in December from 10.1 in November. Prices were forecast to gain 9.7 percent.

By contrast, core inflation that excludes energy, food, alcohol and tobacco, advanced to 5.2 percent from 5.0 percent in November. Economists had forecast the rate to remain stable at 5.0 percent.

Energy prices continued to log double-digit growth in December, up 25.7 percent. However, the rate of growth eased from 34.9 percent in November and 41.5 percent in October.

All other components of the harmonized index of consumer prices posted faster growth rates.

Food, alcohol and tobacco prices advanced 13.8 percent and non-energy industrial goods prices climbed 6.4 percent. Similarly, services cost moved up 4.4 percent.

Looking ahead, headline inflation should decline sharply over the course of 2023 as base effects bring energy inflation down, Capital Economics’ economist Andrew Kenningham said.

The economist assessed that core inflation is likely to fall more gradually due to the resilience of demand, shortage of components and equipment, and rising nominal wages.

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