As a Result of a Slowdown in the Rise in Energy Costs, the Inflation Rate in the Euro Zone Has Decreased to 10%

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Last Updated on November 30, 2022 by Bitfinsider

According to preliminary numbers that were released on Wednesday, inflation in the euro zone slowed marginally in November. This was accompanied by prices falling from record highs and falling short of the forecasts of analysts.

Over the past several months, consumer prices have skyrocketed to an all-time high among the 19 member states of the area. The cost of living problem in the bloc was brought into sharper focus last month when inflation pushed beyond the 10% threshold for the first time in over a year.

The preliminary results that were released on Wednesday by Europe’s statistics agency revealed that headline inflation reached an annual rate of 10% this month, which is a decrease of 0.6 percentage points from the previous month of October.

While both energy and food prices continued to contribute to the high inflation numbers, there was a discernible decline in the former category. According to Eurostat, the annual rate of energy consumption is anticipated to have been 34.9% in November, which is a decrease from the rate of 41.5% recorded in October.

According to Andrew Kenningham, chief Europe economist at Capital Economics, who was quoted in a note, “The fall in headline HICP inflation from 10.6% in October to 10.0% in November was the first decline since June 2021 and was a bigger fall than originally expected.” The drop in inflation came after October’s reading of 10.6% and came after November’s reading of 10.0%.

“Given the unpredictability in the monthly data, we would not be shocked to see the headline inflation rate climb again in December or January,” he continued, “but there is little doubt that it will reduce significantly next year.”

Shortly after the announcement of the numbers, the value of the euro decreased somewhat in comparison to the British pound, trading at £0.863, while it increased by around 0.4 percentage points in comparison to the value of the United States dollar, trading at $1.037.

The lowering of inflation follows on the heels of a comparable collection of statistics coming out of the United States. The consumer price index for October came in lower than analysts had anticipated earlier in this month.

At the beginning of this month, a member of the ECB stated to Bitfinsider that the peak inflation rate was “near reach.” Edward Scicluna, who is also the governor of the Bank of Malta, told Bitfinsider in an exclusive interview that as a consequence of this, he did not anticipate a rate rise of 75 basis points like the one that occurred previously.

The estimates of the market indicate to a rise in rates of fifty basis points in the month of December.

This year, the Federal Reserve has already increased interest rates thrice, and it is widely anticipated that they will do so once more in December. However, there remains a significant amount of uncertainty over the number of rate rises that the ECB will publish for the next year.

However, some economists feel that the current level of inflation warrants more rate adjustments because it is at such a high level. These first group of economists claim that the authorities will have to take a pause to allow for the actual economy to react to the higher rates.

In September, the European Central Bank (ECB) provided an estimate predicting that annual headline inflation will reach 8.1% in 2022 and 5.5% in 2023. At the meeting of the central bank that will take place in December, it is anticipated that these statistics will be revised upward.

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