Eurozone inflation ticks higher in November

(Sharecast News) - Euro area inflation picked up in November in annual terms, although some economists were expecting that it would soon head lower again. According to a preliminary estimate from Eurostat, in seasonally adjusted terms, prices fell by 0.3% month-on-month.

Year-on-year however price growth accelerated from 2.0% in October to 2.3%, although that was as expected.

The annual rate of price gains had plumbed its most recent low in September, when it fell to 1.7%.

Core CPI on the other was again steady at 2.7% year-on-year (consensus: 2.8%).

Inflation in non-energy industrial goods prices picked up from 0.5% during the previous month to 0.7%, while that in services ticked lower by a tenth of a percentage point to 3.9%.

Commenting on the latest data release, Jack Allen-Reynolds at Capital Economics focused on services prices, which he said had only registered a "small" fall, which might keep the European Central Bank from cutting rates by 50 basis points at its December meeting.

Services prices had been stuck at about 4% for a year now, but if not for a base effect linked to transport prices, then services inflation would have slowed to 3.7% in November, he explained.

"While we think there is a good case for the ECB to cut interest rates by 50bp in December, several influential members of the Governing Council seem opposed to the idea and the strength of services inflation will arguably bolster their case," he said.

"But if we're right that services inflation will decline in December and beyond, and that the economy will remain weak, we think bigger cuts will be on the cards sooner or later."