Eurozone inflation in November highest since April 2014

Inflation in the eurozone rose to its highest level since early 2014 in November, in line with expectations, according to a flash estimate released by Eurostat.

Consumer prices in the euro area were up 0.6% from a year ago, compared to 0.5% in October, in line with economists’ forecasts.

Core inflation, which excludes unprocessed food and energy prices, was 0.8% year-on-year compared to 0.7% in October.

Food, alcohol and tobacco prices were up 0.7% in November, compared to a 0.4% rise the month before, mostly due to higher prices of unprocessed food.

Meanwhile, energy prices were down 1.1% compared to a 0.9% drop in October.

Pantheon Macroeconomics said: “A slight upside surprise given the subdued German data yesterday, but consistent with our expectation that EZ inflation will increase in the next three-to-six months.

“These data won’t change the ECB’s position much. We continue to think that the central bank will extend QE by six months to Q3 2017 when it convenes for its December meeting next week. EZ inflation likely will rise sharply in Q1 as base effects from the crash in oil prices push the energy component higher, but the ECB has already stated that it intends to look through that. Core inflation, meanwhile, will remain well below the target of 2%, supporting a decision to prolong stimulus.”