The Eurozone’s CPI inflation in December amounted to 2.9% year-on-year, compared to 2.4% in the previous month. The reading turned out to be slightly lower than the consensus (3.0%). The declining trend of year-on-year inflation has stalled. There is persistent inflation in the services sector where prices have increased by 0.7% over the month. The core inflation, however, has been falling for the subsequent month. In December, it was 3.4% year-on-year compared to 3.6% year-on-year the month before. This is a positive signal that the pressure on prices continues to decrease.
The reading changes little in the context of the ECB’s actions. The data confirm the ECB’s predictions regarding the inflation trajectory. Decisions about future monetary policy will be determined by incoming data from the Eurozone economies. The ECB remains in a pause mode and partially cools expectations of rapid interest rate cuts.
Bartosz Wałecki, Analyst at Michael / Ström Brokerage House
