Eurozone Consumer Price Inflation Falls Back to 2%

Forex News

Growth of the Eurozone consumer inflation slowed as expected in November, supporting European Central Bank’s plans on exit from monetary stimulus. Meanwhile, core inflation readings were also below market expectations. According to the Eurostat report, consumer prices rose 2% in the year to November, down from 2.2% in September.

Core inflation, which removes all food, energy, alcohol and tobacco prices, also fell to 1.0%. Forecasts were for it to be unchanged at 1.1%.

The main reason behind the fall appears to be a waning boost from energy prices. The Eurostat said, that energy prices rose by 9.1% year-on-year in November, from 10.7% in October, while unprocessed food prices were up 1.8% in November, from a 2.1% in October.

Despite the declines, the ECB is still expected on December 13 to end its monetary stimulus program, under which it has since 2015 bought government bonds in the markets to keep interest rates low. The ECB will probably end its 2.6 trillion euro ($2.96 trillion) bond purchase scheme, arguing that inflation is now well on its way to the target and the euro zone economy will continue to expand even with reduced support.