Euro: slightly rising inflation, after all energy cannot fall forever
According to preliminary estimates, annual inflation in the Euro Area accelerated to 2% in October 2024, compared to 1.7% in September, the lowest level since April 2021, and slightly above the forecasts of the '1.9%.
The year-end increase was largely expected thanks to base effects, as last year's sharp drops in energy prices are no longer factored into annual rates and energy cannot continue to fall forever.
Inflation reached the European Central Bank's target. In October, the cost of energy fell at a slower pace (-4.6% versus -6.1%) and prices rose faster for food, alcohol and tobacco (2.9% against 2.4%) and non-energy industrial goods (0.5% against 0.4%).
Services inflation instead stabilized at 3.9%. Meanwhile, the annual core inflation rate, which excludes energy, food, alcohol and tobacco prices, remained unchanged at 2.7%, the lowest since February 2022, but higher than forecasts of 2.6% . However, the core variation, which reflects wage and earnings dynamics, is stabilising.
Compared to the previous month, the CPI rose 0.3%, following a 0.1% decline in September.
Here is the one-year inflation graph:
And here instead with a five-year time horizon
However, inflation is returning to the previous model, with the additional disadvantage that we are now on a depressive path from an economic point of view. Yesterday's slightly better data for France and Germany should not be too misleading.
We will now see if the ECB continues on its path to reducing rates, which in any case is not accompanied by an expansionary monetary policy.
That is, it does not change much in the situation of the EU's progressive economic delay compared to the real economic locomotives of the world. China and USA.
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The article Euro: inflation slightly growing, after all energy cannot fall forever comes from Economic Scenarios .
This is a machine translation of a post published on Scenari Economici at the URL https://scenarieconomici.it/euro-inflazione-in-leggera-crescita-del-resto-lenergia-non-puo-calare-in-eterno/ on Thu, 31 Oct 2024 16:01:38 +0000.