Euro-zone inflation jumped in December as expected, mainly because of more expensive oil, but falling core inflation is likely to cap headline price rises in coming months, economists have said.
The EU’s statistics office Eurostat estimated that consumer prices in the 16 countries using the euro rose 0.9 per cent year-on-year in December after a 0.5 per cent rise in November.
The flash estimate does not include monthly data or a detailed breakdown, which will be available on January 15th, but economists said the annual rise was consistent with a 0.3 per cent month-on-month increase.
“It is likely that an adverse base effect on energy was virtually the only driver of the inflation acceleration – we think energy added 0.4 percentage points to the yearly inflation rate,” said Marco Valli, economist at Unicredit.
Crude oil prices in December 2008 were almost half of the $70-77 per barrel range last month. “The recent significant increase in euro-denominated oil prices will push the inflation rate up further in January, most likely above the 1 per cent mark,” Mr Valli said.
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