Eurozone Inflation Reaches 4.9% YoY the existence of a currency union, Bloomberg reports.
Inflation rose to 4.9 percent on an annualized basis and exceeded the consensus forecast by Bloomberg, which was attended by 40 economists. Experts had expected growth to reach 4.5 percent. At the same time, representatives of the European Central Bank (ECB) do not yet see any reason for panic, noting that the rise in inflation in November was predictable and was due to the rise in prices on the energy market and a number of other temporary factors.
“Energy costs may explain the bulk of this month's jump. This will add concern about the risks of further increases. But inflation will still fall below 2 percent by the end of next year, ”said Maiva Cousin, senior economist at the eurozone agency.
The ECB has assured citizens that there will be no sustained growth. However, this position is not shared by everyone, for example, the head of the Central Bank of Germany, Jens Weidmann, warns that the rise in prices in the eurozone in the medium term will not fall below two percent. In turn, the head of the Central Bank of Spain, Pablo Hernandez de Cos, is more optimistic. In his opinion, inflation risks are not so great as to abandon the multibillion-dollar program of assistance to the European economy.
Updated forecasts of economic growth and inflation will determine the ECB's decision to raise the key rate. In September, forecasts showed inflation to fall to 1.5 percent in 2023. However, the outlook remains unclear due to the emergence of a new strain of coronavirus omicron.
The European Commission's statement that the spread of the virus cannot be prevented only adds to the uncertainty. The virus will also contribute to the desire of countries to impose further restrictions, which could slow down the recovery of the European economy.