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Euro inflation accelerates to 0.9% in December: EU
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Euro inflation accelerates to 0.9% in December: EU
AFP - Wednesday, January 6
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Inflation shot up across continental Europe in December, but analysts insisted that lagging effects of oil price rises are not about to destabilise consumers and central banks.
BRUSSELS (AFP) - – Inflation shot up across continental Europe in December, but analysts insisted on Tuesday that lagging effects of oil price rises are not about to destabilise consumers and central banks.
After six months of falling prices, for everything from energy to housing and food, and stalled wages for those who have not joined the millions of new unemployed since the financial crisis, 12-month eurozone inflation rose for a second month, official European Union data showed.
Prices in the 16 eurozone countries climbed by 0.9 percent according to a flash estimate from the Eurostat data agency.
That was a loosening from the 0.5 percent revised reading for November which marked the first time that prices, on a 12-month basis, had risen since April.
But analysts forecast only moderate upward movement over the coming year, saying that the rise mainly reflected energy costs which have risen again after a collapse in the price of oil and gas during the financial crisis.
"The spike... and the prospect of further increases in early-2010 is unlikely to worry the European Central Bank given that it is very much an energy price base effects story and underlying inflationary pressures currently remain depressed," said Howard Archer of IHS Global Insight.
BNP Paribas economist Clemente De Lucia said that the price of oil rose by more than 20 euros (28.85 dollars) in the year to December 2009 and that energy price inflation accounted for about 10 percent of headline inflation.
"Even though confidence indicators have increased over recent months, firms selling price expectations did not report a similar trend," he added.
Depressed recovery expectations, an unemployment picture that will only get worse before it gets better again and ongoing market jitters over debt blackspots led by Greece and structurally troubled economies such as Ireland all add up to subdued expectations at best for the coming year.
"Key inflation trends for 2010 are a continuation of the deceleration in core prices, a further increase in energy pressures, and an only moderate recovery in food inflation," said Marco Valli of UniCredit Research.
"All in all, we expect the inflation rate to fluctuate in a relatively narrow band this year: from 1.0 percent to 1.6 percent."
Revised Brussels estimates for eurozone growth foresee 0.7 percent for 2010 and 1.5 percent in 2011.
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