Euro Area: inflation heats up due to energy costs

The EU sees a warming in price trends, and

According to preliminary estimates, the annual inflation rate in the Eurozone accelerated for a second month, rising to 2.3% in November 2024 from 2% in October, in line with market expectations.

The year-end increase was largely expected due to base effects, as last year's sharp drops in energy prices are no longer factored into annual rates. Energy prices fell 1.9%, less than the 4.6% decline seen in October.

Additionally, non-energy industrial goods costs rose 0.7%, above October's 0.5%. On the other hand, inflation slowed for services (3.9% versus 4%) and for food, alcohol and tobacco (2.8% versus 2.9%).

Meanwhile, underlying inflation , which excludes volatile food, energy, alcohol and tobacco prices, remained at 2.7% , as in the previous month and defying forecasts for a rise to 2.8% and showing how the wage dynamic is, in reality, limited. Prices don't increase.

Compared to the previous month, the CPI fell 0.3%, following a 0.3% increase in October

Here is the related graph over a one-year time horizon.

Here is the data seen over a broader, ten-year horizon, to give a better understanding of the current situation:

Inflation has therefore risen slightly and energy is to blame. For example, natural gas prices on the Eurozone market, the Dutch TTF, are at their highest levels in a year, and this is transmitted to consumer prices.

However, these are external shocks, linked to factors that are exogenous. If the ECB were to take them as the basis for building its own monetary policy, it would risk making pre-existing conditions that have nothing to do with factors within the EU even more depressive.

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The article Euro Area: inflation heats up due to energy costs comes from Economic Scenarios .

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This is a machine translation of a post published on Scenari Economici at the URL https://scenarieconomici.it/euro-area-inflazione-cresce/ on Fri, 29 Nov 2024 11:51:47 +0000.