Eurozone’s inflation hit record high in November

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The inflation rate in the eurozone hit a record high in November, mainly due to rising energy prices, Eurostat has said.

The EU statistical office on Tuesday added that at a rate of 4.9 per cent, it was the fastest year-on-year increase seen since records began for the 19-country currency area in 1997. October’s inflation was already high at 4.1 per cent.

According to Eurostat, consumer prices were once again propelled by the surge in the cost of energy which is expected to have the highest annual rate in November — 27.4 per cent compared with 23.7 per cent in October, Xinhua news agency reported.

France suffered a 3.4 per cent rise in inflation, but it was in Germany, among the bloc’s largest economies, where prices soared, pushing the rate of inflation to 6 per cent.

According to ING expert Bert Colijn, inflation will “undoubtedly drop again over the course of 2022,” but “we don’t expect inflation to drop much below 2 per cent for late 2022.”

“While second-round effects are largely absent for now, medium-term price pressures are increasing and we expect wage growth to rebound over the course of 2022,” said Colijn.

Maeva Cousin, an economist covering the euro area for Bloomberg Economics, said that while energy costs and statistical effects “can explain the bulk of December’s jump, today’s reading also revealed some stronger than anticipated underlying pressure.”

“That will add to concern over upside risks to the outlook, but the European Central bank is still likely to see inflation falling below 2 per cent by the end of 2022.”

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