Eurozone inflation remained unchanged in December, defying economists’ forecast for a modest slowdown, as a smaller increase in energy costs was offset by higher food prices.
EU harmonized inflation came in at 2.2 percent in December, unchanged from the November rate, preliminary data from the statistical office Eurostat showed Friday.
The latest figure is the lowest since November 2010. Inflation has been hovering above the central bank’s threshold limit of 2 percent for many months.
Economists had expected inflation to ease to 2.1 percent in December. In October, the rate was 2.5 percent.
Last month, the European Central Bank reduced the projection for 2013 to between 1.1 percent and 2.1 percent versus an earlier forecast of between 1.3 percent and 2.5 percent. The central bank is expected to retain its key interest rate at 0.75 percent next week.
Energy prices climbed at a slower rate of 5.2 percent than 5.7 percent in November. Meanwhile, food, alcohol and tobacco prices grew at a faster pace of 3.1 percent after a 3 percent rise in the previous month.
Non-energy industrial goods prices moved up by 1.1 percent. Services costs were higher by 1.8 percent compared to December 2011. Final data is due on January 16.
The economy slipped into recession in the third quarter and it is widely expected to have undergone a severe contraction in the fourth quarter.
The Purchasing Managers’ survey showed that Eurozone downturn eased further at the end of the 2012, as rates of contraction in economic output and new business slowed. But the improvement in December is unlikely to prevent the region having contracted at a sharper rate in the fourth quarter.
by RTT Staff Writer
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