Eurozone Inflation Lowest In 4 Months In December

(RTTNews) - Euro area consumer price inflation eased to its lowest level in four months in December amid a bigger decline in energy prices and a modest slowing in services cost growth, preliminary data from the statistical office Eurostat showed on Wednesday.

The consumer price index rose 2.0 percent year-on-year following an increase of 2.1 percent in each of the previous two months. The easing was in line with economists' expectations. Headline inflation is now at the European Central Bank's target level.

The latest inflation rate was the lowest since August, when it was at the same level.

Core inflation, which excludes prices of energy and fresh food, slowed to 2.3 percent from 2.4 percent logged in the previous two months. Economists had expected the rate to remain unchanged.

Energy prices decreased 1.9 percent year-on-year after a 0.5 percent drop in the previous month. The decline was the worst since August when they fell 2.0 percent. Services inflation eased slightly to 3.4 percent from 3.5 percent.

Prices of food, alcohol and tobacco increased 2.6 percent year-on-year following a 2.4 percent in November. Within this group, prices of fresh food surged 4.2 percent after a 3.2 percent rise in each of the previous two months.

The rate of increase in prices of non-energy industrial goods slowed to 0.4 percent from 0.5 percent.

The CPI rose 0.2 percent month-on-month in December after a 0.3 percent fall in the previous month.

"Despite the slight decline in inflation, we do not expect the ECB to cut interest rates further," Commerzbank economist Vincent Stamer said. "Although inflation below the ECB's target of 2 percent is likely to give the doves tailwind, ECB President Lagarde has said that the ECB will "look through" any base effects."

The economist drew attention to the upward revision of ECB inflation projections for this year.