Eurozone inflation tipped to fall closer to ECB target in November
LONDON (ICIS)–Eurozone inflation continued to fall closer to the European Central Bank’s (ECB) target, according to flash data released by the EU’s statistics agency Eurostat on Thursday.
Annual inflation for the single-currency region is expected to fall to 2.4% in November, down from 2.9% in October, with all segments falling, but only energy remaining in negative territory.
Food, alcohol and tobacco is tipped to remain the largest component driving inflation, falling to 6.9% in November from 7.4% in October, followed by services at 4% down from 4.6% in the previous month.
Non-industrial goods inflation is expected to settle at 2.9% from 3.5%, as energy is anticipated to fall further into negative territory, down to 11.5% in November from 11.2% a month prior.
The ECB has maintained its target of 2% inflation for the eurozone, and levied a series of hikes to key interest rates in order to bring this down.
Analysts at Oxford Economics anticipate that the expected reduction will prompt the ECB to stave off further increases for the time being.
“We expect a cautious rhetoric about the start of the easing cycle, as the inflation path may still be uneven given the end of some government support programmes and potential repricing of contract renewals in January,” said Oxford Economics.
“We expect disinflation will further gain traction in the coming months, leading to the first rate cut in April 2024, a view now also supported by markets, that have also added a full extra cut in 2024, getting closer to our forecast.”
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Thumbnail picture: The ECB headquarters in Frnkfurt, Germany. Source: Florian Gaul/imageBROKER/Shutterstock
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