Yahoo Finance EU inflation rises but ECB boss says interest rate cut in summer 'likely'
Eurozone inflation rose to 2.9% in December as food prices rose and support for high energy bills ended in some countries.
The annual rise in December of consumer prices in the 20 countries that share the euro was up from the 2.4% annual inflation recorded in November, according to statistics body Eurostat. However, it is well under the 9.2% from a year earlier.
Read more: UK inflation rises to 4% in December in blow to interest rate cut hopes
The annual inflation rate across the European Union stood at 3.4%, up from the 3.1% registered in November.
The prices of food, alcohol, and tobacco increased the most in December, up by 6.1% year-on-year. Services costs were flat at 4% year-on-year.
Core inflation, which excludes energy and food prices, slowed from 3.6% in November to 3.4% in December, the lowest since March 2022.
The rise in prices recorded will fuel debate over how soon the European Central Bank will cut interest rates.
ECB president Christine Lagarde has pushed back against rate bet cuts as early as March, saying that central bank will likely lower borrowing costs in summer.
Read more: LIVE: FTSE and European stocks slump after shock rise in UK inflation
Asked if she agreed with fellow ECB governing council members who have signalled a rate cut is expected this summer, Lagarde told Bloomberg in Davos: “I would say it is likely too, but I have to be reserved.”
“We also are saying that we are data dependent, and then there is still a level of uncertainty, and some indicators that are not anchored at the level where we would like to see them,” she added.
The ECB is due to meet to discuss monetary policy on January 25, after leaving interest rates unchanged at 4% in December.
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