Eurozone inflation bumps up again causing political discomfort

Inflation in the eurozone quickened in December for the second month in a row, as rising prices for energy and services kept it uncomfortably above the European Central Bank’s target.

Consumer prices rose by 2.4 percent on an annual basis across the currency area, up from 2.2 percent in November, Eurostat said in a release. In monthly terms, prices rose 0.4 percent.

Inflation in services remains the biggest contributor, up 4.0 percent annually, and up a chunky 0.8 percent just from November. Energy prices rose 0.6 percent on the month, bringing them back above year-earlier levels after four months of annual deflation. Price increases for unprocessed food, meanwhile, slowed to 1.7 percent annually from 2.3 percent the month before.

The result comes after inflation in Germany and Spain both came in above expectations on Monday. However, in France, which reported its figures this morning, consumer prices rose by less than expected, the inflation rate ticking up only marginally to 1.8 percent.

The ECB had repeatedly said that it expected the headline rate of inflation to rise modestly in the near term, as big falls in energy prices in 2023 passed out of the annual calculations. But the enduring strength of services prices, which are driven more by domestic factors, is likely to be more of a worry as a decisive victory over inflation continues to elude it for now.