LONDON (AP) — Europe ended a bad year for inflation with some relief as price gains eased again. While the cost of living is still painfully high, the slowdown is a sign that the worst might be over for weary consumers.
The consumer price index for the 19 countries that used the euro currency rose 9.2% in December from a year earlier, the slowest pace since August, the European Union statistics agency Eurostat said Friday....
The consumer price index for the 19 countries that used the euro currency rose 9.2% in December from a year earlier, the slowest pace since August, the European Union statistics agency Eurostat said Friday. Croatia joined the eurozone on Jan. 1.
Food price gains, the other big factor that’s been driving up European inflation, held fairly steady. Prices for food, alcohol and tobacco rose at a 13.8% annual pace in December, a smidgen higher than the month before.
“It is likely that the peak in inflation is behind us now, but far more relevant for the economy and policymakers is whether inflation will structurally trend back to 2% from here on,” said Bert Colijn, senior eurozone economist at ING Bank.
So-called core inflation, which excludes volatile food and energy costs, climbed to 5.2% last month from November’s 5%, as prices rose for both services and goods such as clothing, appliances, cars and computers. Colijn and other economists said that means European Central Bank officials will likely roll out more interest rate hikes to get inflation back to their 2% target.
Macron spoke to bakers gathered at the presidential palace for a traditional Epiphany kings cake ceremony, underscoring how energy and food prices are intertwined.
“Like you, I’ve had enough of people making excessive profits on the crisis,” he said.
The French government has capped natural gas and electricity price hikes to 15% this year for consumers and some very small companies that don’t use much energy. But more energy-intensive businesses, like bakeries, aren’t covered, leaving some of them facing closure because they can’t pay their bills.
While governments have offered relief on high energy bills, central banks are battling inflation by hiking interest rates.
“The eurozone economy is at best stagnating, and persistently strong core inflation means the ECB will feel duty bound to press on with its tightening cycle for a while yet,” said Andrew Kenningham, chief Europe economist for Capital Economics.