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Eurozone inflation falls to 2.4 pct in November: Eurostat

The annual inflation rate continues to decline in the eurozone dropping to 2.4 percent in November from 2.9 percent in October, according to a flash estimate published by Eurostat, the statistical office of the European Union (EU), on Thursday.

Food, alcohol and tobacco remain the main drivers of inflation, with a 6.9 percent annual rate for November, compared with 7.4 percent in October.

EU countries with the lowest annual inflation rate in November included Belgium (minus 0.7 percent), Italy (0.7 percent) and Finland (0.8 percent).

“We always expected inflation to drop significantly in the final months of the year, but the process of disinflation is happening even more quickly than we expected, particularly for core inflation, where expectations were for price pressures to remain more stubborn,” Bert Colijn, senior economist for the eurozone at ING, commented.

Colijn cited weak demand and a quickly fading supply-side problem as reasons why core inflation is rapidly falling. He said he expected core inflation to fall below 2 percent before the end of 2024.

The European Central Bank’s (ECB) tight monetary policy could therefore be relaxed, with possible rate cuts to be announced before summer 2024, Colijn said.

ECB President Christine Lagarde told the European Parliament on Monday that although she expected the weakening of inflationary pressures to continue, “the medium-term outlook for inflation remains surrounded by considerable uncertainty.” Lagarde acknowledged that wages would continue to play a pivotal role in driving domestic inflation.

Concerning monetary policy, Lagarde confirmed that the ECB’s future policy rates would be set at “sufficiently restrictive levels for as long as necessary” to meet the bank’s target of bringing inflation down to 2 percent.

The ECB kept its interest rates unchanged following ten consecutive hikes since July last year. ■

Famagusta Gazette