Inflation Spreads Across Eurozone -- Update
January 18 2017 - 08:01AM
Dow Jones News
By Paul Hannon
Consumer prices rose in December in almost all of the eurozone's
19 members, a sign the threat of deflation that once loomed over
the currency area has abated.
The European Union's statistics agency said Wednesday that
consumer prices in the eurozone were 0.5% higher than in November,
and up 1.1% on the final month of 2015. That marked a pickup in the
annual rate of inflation from 0.6% in November, and was in line
with an earlier estimate.
As recently as May 2016, consumer prices were lower than a year
earlier across the eurozone. But a combination of rising energy
prices and steady, if modest, economic growth has stoked
inflationary pressures.
That pickup in inflation has spread throughout the currency
area, and to countries that have suffered most from the eurozone's
government debt and banking crises.
Only Ireland is yet to release figures, and were it to report a
rise in prices Thursday, December will have been the first month
since February 2013 in which no eurozone member experienced
deflation.
Among other countries that received an international bailout at
the height of the eurozone's troubles, Greece and Cyprus each
reported rises in consumer prices after long periods of deflation,
while Spain reported a third straight month of inflation. Slovakia
also emerged from a long period of price declines.
Although the European Central Bank focuses on developments in
the eurozone as a whole, the spread of inflation will likely
reinforce its view that the threat of deflation has diminished
significantly, which is one of the reasons policy makers gave for
reducing the monthly rate of bond purchases at their December
meeting.
However, Eurostat confirmed that much of the revival of
inflation is down to higher energy prices, which were up 2.6% on
the year in December, having been down 1.1% in Nov. The core
measure of inflation--which excludes energy and food prices--edged
up to 0.9% from 0.8%, but was still weaker than policy makers would
like.
The ECB's governing council meets Thursday in Frankfurt, and is
expected to leave policy unchanged. While ECB President Mario
Draghi will likely welcome recent economic developments in the
eurozone, he will likely also stress that inflation remains well
short of the central bank's target, which is set at just below
2%.
Write to Paul Hannon at paul.hannon@wsj.com
(END) Dow Jones Newswires
January 18, 2017 07:46 ET (12:46 GMT)
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