Published: Thu, January 05, 2017
Research | By Jennifer Evans

Eurozone inflation jumps to 1.1% in Dec, highest since 2013

Eurozone inflation jumps to 1.1% in Dec, highest since 2013

Data on Wednesday showed euro zone consumer prices rose more than expected in December - 1.1 percent year-on-year, compared with 0.6 percent the month before, overshooting forecasts of 1 percent.

Economists argued that December's inflation rise reflected anticipated energy effects and would therefore not deter the European Central Bank from its commitment to sustained policy loosening.

"Important will be the core (euro zone) figure and whether it will also nudge higher from the 0.8 percent level where it has been for four straight months", the strategists said in a note. Then Eurostat will communicate and inflation data across the European Union for the last month of 2016.

Italy saw consumer prices fall in 2016, the first year of deflation since 1959, according to official data published Wednesday.

The 1.1 percent figure for the 19-country single currency area almost doubled November's 0.6 percent in a boost for the fragile economic recovery.

Lydall continued: "Higher inflation this month could likely be linked to oil prices, but is a step in the right direction as a crucial year is upon the bloc state - keep populist movements at bay and Euro-sceptics could remain exactly that, sceptical and unjustified".

Paul Sirani, chief market analyst at Xtrade, said: "This latest data could mark the beginning of the end to ECB's bond-buying programme and expansive monetary policy as it edges closer to their inflation target of two percent".

"This jump in inflation is a signal to exit from the ECB's expansive monetary policy... if these figures are confirmed for the Euro-Zone as a whole, the European Central Bank should end the bond buying program in March 2017", he said.

"Job creation should continue this year", said Joerg Zeuner of KfW bank.

The PMI measures companies' readiness to spend on their business and so gives a good idea of how the underlying economy is performing.

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