Eurozone Nov inflation unchanged

Eurozone inflation was unchanged at 2.4% in November on an annualised basis and in line with expectations, according to a final reading published on Tuesday.

The month-on-month fall was 0.6, faster than the forecast 0.5% decline. Core inflation, which strips out volatile readings like energy and food, was still at 3.6% year-on-year.

"Looking ahead, base effects will push up energy inflation in December. Energy prices plunged by 6.6% on the month in December last year, due a one-off fiscal subsidy in Germany," said Pantheon Macroeconomic chief eurozone economist Claus Vistesen.

"We think the energy HICP will fall on the month in December, but not by the same amount as it did last year, so energy inflation in year-over-year terms will snap back. We look for an increase to around -7%, but it’s anybody’s guess at this point given the possibility of further near-term volatility in oil and gas prices in response to tensions in the Red Sea."

"In the core, meanwhile, we look for a relatively small decline in December, to 3.4%. Overall, we see headline inflation in December rising by 0.4pp to 2.8%."

"A rebound in December inflation is uncontroversial. The January inflation is anything but. ECB officials have been busy pushing back against market expectations for rate cuts in the first half of next year, for two reasons. Firstly, because of still-sticky wage growth and unit labour costs, but for a second reason too; the council believes inflation will rise increase further at the start of the year."

Reporting by Frank Prenesti for Sharecast.com