Inflation Inched Up in Europe in November
Inflation in the euro area moved above zero in
November for the first time in five months, according to a preliminary report
Monday, as higher energy prices pushed the index higher.
Consumer prices in the euro area rose by 0.6 percent
in November from the same month a year earlier, said Eurostat, the European
Union’s statistical agency. In October the rate was minus 0.1 percent.
No further details were released; a fuller estimate is
due to be published on Dec. 16.
Economists said the increase was mainly the result of
energy-price base effects as crude oil prices, in euro terms, were down sharply
in November 2008 but have been rising since the end of the summer.
This trend, they said, will probably continue to push
the rate higher in coming months even though, further out, inflation prospects
for the region remain subdued.
Food inflation probably moved off its lows seen in
October, but it is likely to have remained deeply in negative territory,
analysts added.
Martin van Vliet, an economist at ING, said he
expected inflation to stay “comfortably below” the European Central Bank’s
medium-term target of below but close to 2 percent.
That is also partly because the recovery in growth has
been muted — and is expected to continue to remain so — and because the amount
of spare capacity in the economy should keep core inflation, excluding food and
fuel, on a downward trend for some time. That should mitigate some of the
upward pressure from energy prices.
The recent rise in the value of the euro against the
U.S. dollar and a host of other currencies will also work against any sharp
price increases in the euro area.
Muted gains in inflation would allow the central bank
to retain its measured approach toward monetary policy, by continuing to slowly
unwind its non-conventional support measures for lenders, while delaying an
increase in interest rates, analysts said.
“We think that headline inflation will rise further,
to around 1 percent next month, and then settle at around those levels next
year,” said Nick Kounis, chief European economist at Fortis Bank in Amsterdam.
Overall, the report “confirms that the outlook is for
low, below-target inflation rather than deflation and supports the E.C.B.’s
steady-hand approach to monetary policy.”
The central bank will meet Thursday in Frankfurt to
discuss interest rates and other policy steps.
Source: nytimes.com