Euro-Area Inflation Edges Higher, Core Remains Stuck at 1.3%
Euro-Area Inflation Edges Higher, Core Remains Stuck at 1.3%
(Bloomberg) --
Euro-area inflation accelerated to the fastest pace in eight months in December, driven by energy prices.
The pickup to 1.3% in December from 1% in November was in line with economists expectations. The core rate, which strips out volatile components such as energy, remained stuck at 1.3%.
The figures come as new European Central Bank President Christine Lagarde prepares to launch a review that may include a deep dive into the causes of weak price pressures. The ECB has already resorted to increasingly creative stimulus measures including negative rates, cheap loans and trillions of euros in asset purchases to push inflation closer to its goal of just under 2%.
Headline inflation could get support if concern about the worsening dispute between the U.S. and Iran pushes oil prices higher in the longer term. But that won’t satisfy the ECB, which wants to see a sustainable pickup in underlying inflation.
Brent crude declined on Tuesday, but it hit $70 a barrel on Monday, the highest level since September.
Details of the ECB’s first strategy review since 2003 could come at its Jan. 23 policy decision.
Some officials, including Estonian Governor Madis Muller, have argued the ECB should first look into the causes of low inflation, which has undershoot the goal for a better part of the last decade. There’s also a debate about changing to a more precise target of 2%.
In the meantime, the ECB has pledged to keep its latest stimulus in place until inflation is firmly back within its target. The euro-area economy is starting to stabilize after a slowdown in 2019, though growth this year may not exceed 1%.
Separately, Eurostat said on Tuesday retail sales in the euro area rose 1% in November from the previous month, marking its first gain since August.
To contact the reporter on this story: Piotr Skolimowski in Frankfurt at pskolimowski@bloomberg.net
To contact the editors responsible for this story: Paul Gordon at pgordon6@bloomberg.net, Fergal O'Brien
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