Eurozone Inflation Falls to ECB’s 2% Target

Eurozone inflation fell to 2.0% in December, meeting the European Central Bank’s price stability target and reinforcing signs that the sharp surge in prices in recent years is fading.

With both headline and core inflation stabilizing, financial markets see limited scope for immediate action by the ECB.

Estimates published by Eurostat recently showed the annual rate of consumer price growth slowed from 2.1% in November to 2.0% in December, Piero Cingari reported for Euronews.

Underlying price pressures also eased. Core inflation, which strips out volatile food and energy components and is closely watched by policymakers, fell to 2.3% year-on-year from 2.4% in November, its lowest level since August.

On a monthly basis, consumer prices rose by 0.2% in December, rebounding from a 0.3% decline the previous month.

A breakdown of inflation showed a familiar pattern: services continued to record the strongest annual increase, at 3.4%, although this was slightly down from November.

Food, alcohol, and tobacco inflation edged higher to 2.6%, while non-energy industrial goods prices rose by just 0.4%. Energy prices remained firmly in negative territory, falling 1.9% from a year earlier, a key factor behind the broader slowdown in headline inflation.

With both headline and core inflation stabilizing, financial markets see limited scope for immediate action by the ECB.