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Europe is optimistic about inflation.

 

Europe is optimistic about inflation

Lower energy prices helped push inflation down in France, as European stocks rose on growing expectations that inflation has peaked across the region. Inflation fell to 6.7 per cent in the year to December, against economists’ expectations of a slight rise after the 7.1 per cent figure recorded for November. European stocks built on their early 2023 rally after the inflation report. The measure of harmonised prices, produced by Insee, France’s statistics agency, follows similar slides in Spain and Germany and boosted expectations that headline inflation in the eurozone will fall sharply following last year’s surge to double-digit levels.

A sharper-than-expected fall in inflation early this year would allow the European Central Bank, which raised borrowing costs aggressively during 2022 to counter record-high prices, to stop raising rates before the summer. Eurozone inflation is expected to drop into single digits for the first time in three months on the back of the fall in energy prices paid by the region’s households and businesses, a consequence of measures from the region’s governments to keep the cost of gas in check and warmer than usual winter weather. Claus Vistesen, an economist at Pantheon Macroeconomics, said this week’s price data pointed to «a significant downside surprise» in tomorrow’s eurozone inflation figures, predicting a fall to as low as 9 per cent in the headline rate. The euro traded 0.7 per cent higher against the dollar at $1.061 yesterday, despite the inflation data.

Headline inflation in the bloc is expected to drop sharply in spring as the impact of last year’s surge in energy prices falls out of the annual index.

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Comments

  1. Anonymous5 January 2023 at 14:49

    Well, this is good news and I want to see this reflected in prices. Most have gone up every 2 weeks in the past 3-4 months so as soon as I see them go down for a few weeks/months, I will believe we are heading in the right direction.

    ReplyDelete
    Replies
    1. Sam5 January 2023 at 14:55

      Yeah, there wasn't a week in Q4 of last year when something wasn't more expensive than last week. It was very strange and I can only imagine how hard this was and is for people struggling with money.

      Delete
  2. Tim5 January 2023 at 18:43

    Spain, Germany and France should recover well from all of this. It may take this year for them to do so, but I predict a very good 2024 for these countries.

    ReplyDelete

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