Inflation in the eurozone rose to 4.9 percent on an annual basis in November. That reports the European statistical office Eurostat Friday, based on a new estimate. Prices for energy, such as gas and electricity, and several goods and services in particular rose sharply. In October inflation in the eurozone was still 4.1 percent.
Worldwide there is a so-called inflation boom, which means that people can buy much less for the same amount. The US takes the cake with an inflation rate of 6.8 percent, but prices are also rising sharply in the United Kingdom – about 5 percent – and therefore also in the eurozone.
The so-called core inflation, which excludes strongly fluctuating prices of foodstuffs, energy, alcohol and tobacco, stood at 2.6 percent last month. Core inflation, an important indicator for the European Central Bank (ECB) for, among other things, determining the interest rate for banks, was still 2 percent on an annual basis in October.
Also read: Divided ECB cuts corona support and gambles on inflation ebbing
No interest rate increase
As expected, the ECB will not raise interest rates until 2023. The organization, responsible for the monetary policy of the European Union, expects inflation to fall below the desired 2 percent in the medium term. The central bank expects inflation to be 1.8 percent for 2023 and 2024 and expects core inflation to remain below 1.9 percent next year. ECB President Christine Lagarde does say that the latter percentage could be higher if salaries rise faster than expected. Companies would then raise the prices of their goods and services.
The ECB can curb inflation by raising interest rates. It then becomes more attractive for people to save instead of spending money. Borrowing becomes less attractive at high interest rates. The rate hike is likely to lower demand for goods and services. If production remains the same at that time, prices will fall.
#Eurozone #inflation #continues #rise #percent