November flash: +2.2% y/y

MNI survey median: +2.4% y/y
MNI survey range: +2.2% to +2.5% y/y

October final: +2.5% y/y
—

FRANKFURT (MNI) – Eurozone inflation slowed more than expected in
November to its weakest annual rate in nearly two years, as the upward
trend in energy, as well as food, alcohol and tobacco prices slowed,
Eurostat reported Friday.

The 2.2% headline rate, the lowest since December 2010, suggests a
monthly price decrease of around 0.3%.

Energy price inflation came to +5.8% on the year, the weakest rate
of increase since February 2010 (+3.3%), while non-energy industry goods
inflation was unchanged at +1.1%.

Food, alcohol and tobacco prices were 3.0% higher y/y compared to
+3.1% in September. Service price inflation was stable at 1.7% for the
third consecutive month.

A more detailed breakdown of inflation components will be published
on December 14.

The deceleration in inflation is likely to continue over the coming
months, as surging unemployment keep wages in check and weak demand
pushes companies to offer further discounts.

Supporting this assessment, the November PMI poll showed input cost
inflation slowing to a three-month low, while prices charged for goods
and services fell further.

A European Commission survey noted selling-price expectations
falling further in November in all major sectors except construction to
multi-month lows. Consumers’ inflation fears receded for the first time
since June to a four-month low.

The Organisation for Economic Cooperation and Development forecast
this week that Eurozone inflation would slow from an average of +2.4%
this year to +1.6% next year and to +1.2% in 2014.

Professional forecasters polled by the European Central Bank last
month revised up their HICP outlook for this year and the next to +2.5%
and +1.9%, respectively, and left the 2014 call unchanged at +1.9%.

The revisions “mainly reflect higher than expected increases in
commodity prices and indirect taxes,” the ECB explained, noting that
risks to the baseline inflation outlook were seen as “broadly balanced.”

— Frankfurt bureau: +49-69-720 142; email: twailoo@mni-news.com —

[TOPICS: M$X$$$,MT$$$$,M$XDS$,MTABLE]