Annual inflation rate drops to 10% in Eurozone

By Al Mayadeen English
Source: Agencies
30 Nov 2022 19:21
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The eurozone annual inflation rate slowed to 10 percent in November which is a decline on October's 10.6% as the energy prices eased.

Artworks and antique furniture are displayed inside a shop in Rome, Wednesday, Nov. 9, 2022 (AP Photo/Gregorio Borgia)

Figures from Eurostat data showed on Wednesday that the Eurozone annual inflation rate fell for the first time in the past 17 months in November with a staggering decrease of 10%.

Inflation in the Eurozone began surging in early 2021, nearly a year before the war in Ukraine. It was further boosted by soaring energy and food bills triggered by the EU's own reckless decision to sanction Russia.

Previous forecasts by Bloomberg and Factset suggested that the inflation rate of the euro would fall by 10.4 percent, which is slightly higher than the actual drop recorded in November.

In October, inflation was recorded at 10.6 percent, up from 9.9 percent in September.

It is unlikely however that November figures would change Europe's Central Bank decision to stop raising interest rates.

"I think that there is too much uncertainty ... to assume that inflation has actually reached its peak. It would surprise me," said Christine Laguarde, President of the European Central Bank.

Observers argue that European Central Bank policymakers may slow down interest-rate hiking with only a 50 basis-point increase next month, rather than the expected 75-point bump.

"We were due some good news," said Bert Colijn, senior eurozone economist at the ING bank. "The eurozone inflation rate ticked down after a few nasty upside surprises."

But the economist warned that core would inflation remain stable.

"Whether this is the peak in inflation remains to be seen," he said.

"Another episode in the energy crisis could easily push inflation back up again and core inflation usually proves to be sticky after a supply shock."

Andrew Kenningham, a chief Europe economist at Capital Economics, likewise cautioned, "Eurozone headline inflation may now be past its peak but with core inflation unchanged in November and likely to stay well above 2 percent throughout next year, we expect the ECB to press on with another 50 basis point or even 75 basis point deposit rate hike in December."

On September 7, it was reported that the euro fell below $0.99, dropping to a 20-year low against the dollar. The euro sunk 0.70 percent to 0.9884 dollars at 0535 GMT on Monday, its lowest level since December 2002.