Eurozone inflation declines for the first time in 17 months indicating that a peak has been reached
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Summary:
- Latest eurozone inflation reading could suggest a peak has been reached.
- Eurozone inflation came in at 10% for October.
- The ECB is expected to raise rates by 0.5 percentage points.
Eurozone inflation may have reached its peak
The European Central Bank (ECB) may be able to switch to smaller interest rate increases next month as a result of the eurozone's inflation declining for the first time in 17 months and suggesting that the largest price spike in a generation has peaked. According to data released by the EU's statistics agency on Wednesday, a slowdown in energy and services prices led inflation in the single currency bloc to fall more than predicted to 10% in November, down from a record 10.6% in October.
Recently, there has been increased optimism that inflation in the eurozone is falling due to a decline in wholesale energy prices in Europe and the alleviation of supply chain bottlenecks. Additionally, US inflation decreased in October, and worldwide data signs point to the pinnacle of this year's raging global inflation. The ECB is expected to raise rates by 0.5 percentage points when its governing council meets on December 15 after two consecutive 0.75 point increases, according to economists, as a result of the slowing rate of inflation in the eurozone.
However, price rise in the region is still above the ECB's 2% target, and some officials contend that in order to prevent a harmful wage-price spiral from taking root, rates must be rapidly raised even as inflation slows. The widely watched core inflation rate, which excludes more erratic energy and food costs to provide analysts with a clearer picture of underlying pricing pressures, remained steady at 5%.
Sources: ft.com, twitter.com
