Status: 11/30/2022 11:28 am
The inflation rate in the euro zone fell in November for the first time in many months. That should alleviate some of the pressure on the ECB to continue raising interest rates sharply.
According to an initial estimate by the statistics office Eurostat, the inflation rate in the euro zone has fallen to 10.0 percent. In October, inflation was 10.6 percent. Economists had expected a decline to 10.4 percent.
Energy prices are no longer rising quite as much
Once again, energy prices fueled inflation in November – albeit not quite as strongly as in the previous months. Energy prices rose by 34.9 percent year-on-year after 41.5 percent in October.
Food, alcohol and tobacco prices rose 13.6 percent from 13.1 percent in October. Non-energy industrial goods rose 6.1 percent, the same as in October. Services prices increased by 4.2 percent in November after 4.3 percent in October.
Inflation rate also surprisingly decreased in Germany
Only yesterday the surprising weakening of the inflation rate in Germany provided some relief. Consumer prices in Germany rose by 10.0 percent in November after 10.4 percent in October. It was the first month-on-month decline since July.
What is the ECB doing?
The fresh inflation data from the euro zone should ease the pressure on the European Central Bank (ECB) to continue raising interest rates. However, the ECB is still lagging behind the US Federal Reserve in terms of the cycle of rate hikes. After much hesitation, it has only been fighting record high inflation since July with sharp increases in interest rates.
The key interest rate in the euro area, which was frozen at a record low of zero percent for years, is now 2.0 percent. The European monetary authorities will announce their last interest rate decision of the year on December 15th. The ECB is aiming for an inflation rate of two percent as the ideal value for the euro zone. It is currently very far from this goal.