November: +0.1% m/m, +3.0% y/y
October: +0.3% m/m, +3.0% y/y
September: +0.8% m/m, +3.0% y/y
August: +0.2% m/m, +2.5% y/y
July: -0.6% m/m, +2.5% y/y
—

FRANKFURT (MNI) – Eurozone annual consumer price inflation remained
at a 35-month high of +3.0% for the third consecutive month in November,
as prices slowed to an expected 0.1% monthly growth rate, Eurostat
confirmed on Thursday.

The largest upward impacts on the monthly figure came from
vegetable, heating oil and transport fuel prices, which added a combined
0.1 percentage point to the monthly rate. Conversely, cheaper
accommodation services package holidays, air transport and cars cut a
combined 0.19 point.

With energy price inflation slowing only slightly to +12.3% on the
year, transport fuels and heating oil prices had the strongest upward
impact on the annual figure, adding 0.7 percentage point to the headline
rate. Lower telecommunication prices, along with cheaper rents,
vegetables and cars cut 0.44 from HICP.

Excluding energy, along with food, alcohol and tobacco prices
(+3.4% y/y), core inflation was stable, holding firm at +1.6% for
three months in a row

The European Central Bank’s preferred measure of core inflation,
which filters out energy and unprocessed food prices was also unchanged,
marking the third month of +2.0% y/y.

With the exception of France, where inflation picked up 2.7% y/y
from +2.5%, the larger Eurozone economies saw modest slowdowns in
November. German inflation slipped to +2.8% on the year from +2.9% in
October, while Italy eased to +3.7% from +3.8%. Spanish inflation came
to +2.9%, down 0.1 percentage point. In the Netherlands, HICP rose 2.7%
on the year compared to +2.8% previously.

Inflation is likely to remain above the ECB’s target of close to
but less than 2% for the coming months at least until base effects of
past commodity price increases unwind.

The November PMI surveys showed input prices accelerating in
Germany, France, Spain and Ireland, while German, French and Italian
manufacturers and service providers hiked selling prices.

Selling price expectations in manufacturing and retailing also
increased last month, reaching or surpassing respective long-run
averages, while remaining above the norm in services, the European
Commission reported. Consumers’ one-year price outlook recovered after a
two-month fall.

Still, a number of forecasts point to consumer price growth easing
over the course of next year, as slowing economic activity and
favourable base effects come into play.

The December ECB staff projections forecast inflation in the
Eurozone ranging between +2.6% and +2.8% on average this year and ease
to between +1.5% and +2.5% in 2012. For 2013, HICP is expected at
between +0.8% and +2.2%.

“The Governing Council continues to view the risks to the
medium-term outlook for price developments as broadly balanced,” ECB
President Mario Draghi said following the central bank’s decision to cut
its main refinancing rate to 1.0%.

Released in November, the Survey of Professional Forecasters
pointed to HICP averaging +2.6% this year before falling to +1.8% for
both 2012 and 2013, while the Organization for Economic Cooperation and
Development saw inflation easing to +1.6% next year after +2.6% in 2011.
For 2013, the OECD forecast prices up 1.2%.

— Frankfurt bureau: +49 69 720 142; e-mail: frankfurt@marketnews.com —

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