2024-01-05 10:34:00
[Article publié le vendredi 5 janvier 2024 à 11H34 et mis à jour à 12H19]The phenomenon is confirmed within the euro zone: inflation rose, for the twenty countries having adopted the single currency, in December to 2.9% over one year, according to figures revealed this Friday by Eurostat. However, it stood at 2.4% in November, which represented a sharp drop compared to previous months.
However, this is not a surprise. The announced figure is, in fact, consistent with the forecasts of analysts surveyed by Bloomberg.
This new increase can only be explained by a lesser decline in energy prices in December. They fell by 6.7% compared to the same month last year, but in November this drop had reached 11.5%. The rise in food prices (including alcohol and tobacco) declined to 6.1% in December, after 6.9% the previous month.
But the figure most scrutinized by the financial markets and the European Central Bank (ECB) is that of underlying inflation, corrected for the very volatile prices of energy and food. However, this indicator, considered more representative, fell in December to 3.4%, after 3.6% in November, in line with analysts’ forecasts, an encouraging signal.
As for the increase in service prices, it remained at 4% year-on-year in December, that of industrial goods fell to 2.5%, or 0.4 points less than the previous month.
The ECB does not want to let its guard down
The fact remains that these results reinforce the precautions taken by the European Central Bank (ECB) regarding a possible reduction in rates. While the institution has tightened its monetary policy since July 2022 – the deposit rate, which is the benchmark, is now at 4.0%, its highest level since the launch of the single currency in 1999 -, it has made the choice, several times in recent months, not to raise its rates and to leave them at their current level.
However, “we must not let our guard down”warned its president, Christine Lagarde, last December, ensuring that the institution “did not discuss rate cuts at all”, during its last meeting. As a reminder, the Frankfurt institution aims to reduce inflation to 2%.
2024, the year of lower interest rates in Europe?
Return of inflation in France and Germany
However, this objective seems far from being achieved. This is also evidenced by the return to the rise of French inflation: it, in fact, recorded a surprise rebound last month to 3.7% over one year, compared to +3.5% in November, according to provisional data, published the day before by INSEE. According to figures from Eurostat, which takes into account the harmonized consumer price index (HICP), inflation there reached 4.1% in December, making it one of the most affected countries. At the origin of this rebound, as in the rest of Europe, is “acceleration” prices of energy and services, the institute said.
Same story in Germany, where inflation rose to 3.7% over one year in December – 3.8% according to Eurostat – which constitutes an increase in consumer prices of 0.5 percentage point compared to in November, when it had slowed to 3.2% over one year, according to the federal statistics institute Destatis on Thursday.
As for Slovakia and Austria, they saw prices increase the fastest with inflation at 6.6% and 5.7% respectively.
Portugal below 2%
On the other hand, certain countries are doing well. Starting with Portugal, which saw its inflation decrease in December. Better: the country managed to bring it down below 2%. It stood, in fact, at 1.8% over one year last month, compared to 2.2% in November.
How Portugal became the good student of the European Union
Enough to consolidate its position as a good student within the euro zone. For example, the country plans to achieve a public surplus of 0.8% of GDP in 2023, while the government was counting on a deficit of 0.4% until October, according to the draft state budget for 2024. An unprecedented result for almost 50 years. As for public debt, the government plans to bring it below the threshold of 100% of GDP from 2024. Finally, Portugal’s statistical services anticipate a GDP increase of 2.2% for this year.
Belgium and Italy can boast of having the lowest inflation rate in December, at 0.5%, within the euro zone according to Eurostat figures. It even decreased again in Italy. “In December, the phase of falling inflation continued, which decreased to 0.6% compared to 11.6% in December 2022”thanks to “the reduction in tensions on the prices of energy goods (+1.2% against +50.9% in 2022)”, commented the National Institute of Statistics (Istat). It is therefore at a level well below that of the euro zone average.
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