Richard Parks Eurozone inflation rose to 2.4% in December, marking the highest level since July. The increase, driven by higher energy and services costs, reflects continued inflationary pressures across major economies. Germany, France, and Italy experienced varying trends, with core inflation holding steady at 2.7%.
December Inflation Hits 2.4%, Highest Since July
Eurozone inflation increased to 2.4% in December, according to Eurostat, marking the third straight month of growth. This figure, up from 2.2% in November, is the highest since July, driven by rising energy and services costs.
Energy prices edged up by 0.1% in December, reversing a -2% decline in November, while services inflation rose slightly to 4% from 3.9%. In contrast, inflation for food, alcohol, and tobacco moderated due to falling unprocessed food prices, despite increases in processed food and alcohol costs.
Diverging Inflation Trends Across Key Economies
Inflation trends varied significantly across the Eurozone’s major economies:
- Germany: Inflation rose to 2.8% in December, up from 2.4% in November, driven by higher food and energy costs.
- France: Inflation increased to 1.8% from 1.7%, fueled by rising electricity tariffs.
- Italy: Inflation fell to 1.4% from 1.5%, reflecting lower prices for industrial goods and services.
The Eurozone’s annual core inflation rate, which excludes volatile categories like energy and food, remained steady at 2.7% for the fourth consecutive month.
Economic Outlook Remains Challenging
The persistence of core inflation highlights ongoing economic challenges for the Eurozone. Germany and France continue to face higher costs from energy and supply chain disruptions, while Italy’s inflation decline offers a rare relief. Policymakers will likely remain cautious as energy costs and services inflation exert upward pressure on overall price levels.