Inflation in the euro zone fell to 10% year-on-year in November, six tenths less than the previous month in its first decline since June 2021, according to data advanced this Wednesday by Eurostat. The rise in prices had been chaining record after record, although the high rate keeps the focus on the European Central Bank, which meets in two weeks, and a possible rate increase.
Energy prices continue to skyrocket and rise by 35% year-on-year, although they are seven points less than in October. The food, alcohol and tobacco group, for its part, became more expensive by 13.6%, five tenths more. In services the rise is 4.2%, one tenth less.
Core inflation remains at 5%, at a maximum, in a sign that energy contagion to other sectors will be more difficult to tackle. "It will probably remain high, keeping headline inflation high for a long time," they point out at Oxford Economics.
With headline inflation down and core inflation unchanged, many unknowns remain to be resolved, believes Mauro Valle of Generali Investments. "There is no clear direction," he says.
With a general look, prices rise at a slower pace in all countries except Latvia (21.7%, same as the previous month), France (7.1%), Slovenia (from 10.3% to 10.8% ), Slovakia (from 14.5% to 15.1%) and Finland (from 8.4% to 9%). In the main economies such as Germany (11.3%, three tenths less), Spain (6.6%, seven less) and Italy (12.5%, one less) the upward path seems to be behind us.
Spain has in fact become the country with the lowest inflation in the euro area in harmonized statistics. This is due "to the positive impact of the measures put in place to cushion the rise in prices, such as those related to transport," they say from the Ministry of Economic Affairs. While at the peak of the inflationary crisis the country was above the continental average, now that it is below there is "an improvement in competitiveness for companies and the Spanish economy".
The challenge of normalizing monetary policy is still there. The European Central Bank is scheduled to meet next Thursday, December 15, to make one last adjustment to its policy, after beginning the path of rising interest rates a few months ago. Currently they are at 2%. "Today's data supports our forecast of a rise of 50 points (another 0.5%) in December on a more aggressive view that points to an increase of 75 points," they say in Oxford Economics.
