Inflation in the euro area is weakening more and more as a result of the sluggish economy and the ECB’s tightening policy. Consumer prices only increased by 2.4 percent in November compared to the same month last year, as the Eurostat statistics office announced on Thursday in an initial estimate. This is the lowest inflation since July 2021. Economists had expected a higher rate of 2.7 percent. In October, consumer prices rose by 2.9 percent. In Germany the rate was 3.2 percent in November, according to the Federal Statistical Office in its first estimate on Wednesday. This is the lowest value since June 2021.
Core inflation, which excludes volatile energy and food prices as well as alcohol and tobacco, fell to 3.6 percent in the euro area in November, after 4.2 percent in October. This means that the European Central Bank’s (ECB) medium-term goal of an inflation rate of 2.0 percent is increasingly within reach.
The euro watchdogs have raised interest rates ten times in a row since the summer of 2022 in the fight against a massive price surge. However, at their most recent meeting in October, they decided to take a break from interest rates due to the weak economy and the already sharp decline in price pressure. And for the last interest rate meeting this year on December 14th, experts expect that the Euro Central Bank will neither raise nor lower interest rates.
The deposit rate that banks receive from the central bank for parking excess funds, which sets the trend in the financial market, is now 4.00 percent. This is the highest level since the start of the monetary union in 1999. Energy prices fell significantly by 11.5 percent in November compared to the same month last year. In October the decline was 11.2 percent. Prices for food, alcohol and tobacco, on the other hand, rose by 6.9 percent after an increase of 7.4 percent in October. Non-energy industrial goods rose in price by 2.9 percent after the previous 3.5 percent. Prices for services rose by 4.0 percent after 4.6 percent in October.