Euro Area: Harmonized inflation comes in at highest level since July in December
Latest reading: Harmonized inflation came in at 2.4% in December, which was up from November’s 2.2%. December’s reading represented the highest inflation rate since July and was in line with market expectations. The result was mainly driven by a rebound in energy prices, though this was largely due to a base effect. Moreover, services inflation ticked up.
The trend was unchanged, with annual average harmonized inflation coming in at November’s 2.4% in December. Meanwhile, core inflation was steady, coming in at November’s 2.7% in December.
Lastly, harmonized consumer prices rose 0.36% in December over the previous month, swinging from November’s 0.32% drop. December’s figure was the highest reading since April.
Outlook: Our Consensus is for inflation to soften in the coming months and to stabilize at the ECB 2.0% target from Q2 onwards.