[Asia Economy Reporter Chunhee Lee] The consumer price inflation rate in the Eurozone (20 countries using the euro) has been slowing for three consecutive months, according to a recent survey.
Eurostat, the statistical office of the European Union (EU), announced on the 1st (local time) that the Eurozone consumer prices rose by 8.5% year-on-year (flash estimate) this month. This figure is significantly lower than the initially predicted increase of 8.9% to 9% by the market.
The Eurozone consumer price inflation rate peaked at 10.6% year-on-year in October last year, then declined to 10.1% in November, 9.2% last month, and 8.5% this month, showing a decreasing trend in the rate of increase.
By sector, energy prices jumped 17.2% compared to a year ago but showed rapid stabilization compared to the previous month's increase of 25.7%. The inflation rate for food, alcoholic beverages, and tobacco rose to 14.1%, up from 13.8% the previous month. Other sectors recorded increases of 6.9% for industrial goods and 4.2% for services.
Based on the Harmonized Index of Consumer Prices (HICP) used by the European Central Bank (ECB), the estimated inflation rates for major countries in January among the 20 Eurozone countries showed Luxembourg and Spain with the lowest inflation rates at 5.8% each. France and Italy recorded 7.0% and 10.9%, respectively, while Croatia, which joined the Eurozone this year, had an inflation rate of 12.5%.
However, Eurostat reported that Germany, the largest economy in Europe, was not included in this month's statistics due to technical issues related to data processing. When Germany's figures are included in the future, there is a possibility that the inflation rate will be revised upward from the flash estimate announced today.
Even though the overall inflation rate in the Eurozone is rapidly slowing, the European Central Bank (ECB) is likely to maintain its interest rate hike policy for the time being. The market expects the ECB to implement an additional 0.5 percentage point rate hike at its first monetary policy meeting of the new year on the 2nd. ECB President Christine Lagarde also indicated an additional rate hike last month, stating, "It is important to prevent inflation rates from settling above the ECB's target of 2%." However, since inflation is slowing faster than expected, it is anticipated that intense debates over the pace of future rate hikes will heat up within the ECB.
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