In a recent report, the European Union’s statistics agency Eurostat published preliminary data revealing that Eurozone inflation rebounded in December. However, the rise was lower than economists had anticipated. These findings have sparked speculation that the European Central Bank (ECB) may soon signal plans to cut interest rates.
Moderate Increase in Consumer Price Index
According to the data, the bloc’s consumer price index, which measures the cost of goods and services, increased by 2.9% on a yearly basis. This reflects a slight rise compared to the previous month’s figure of 2.4%. Economists surveyed by The Wall Street Journal had predicted a larger increase of 3.0% for the same period. It is worth noting that inflation had experienced a downward trend in the five months leading up to November.
Core Inflation Dips Lower
The report further indicated that core inflation, which excludes volatile components like energy, food, alcohol, and tobacco prices, slightly decreased from 3.6% in November to 3.4% in December. Similar to the headline inflation figures, this reading fell short of the consensus forecast of 3.5%.
Implications for ECB Policy
The lower-than-expected inflation readings for both headline and core measures may prompt calls for earlier rate cuts by the ECB. As inflation approaches the central bank’s 2% target, there is growing pressure for preemptive action to maintain stability.
