Eurozone inflation rises to 1.3pc in December

BRUSSELS (AFP) – Eurozone inflation accelerated sharply last December to 1.3 per cent, official data said yesterday, but it still remains well below the European Central Bank’s (ECB) target of near two per cent.

The figure by the European Union’s (EU) Eurostat service is in line with the forecasts of analysts surveyed by financial data service Factset. In November, the annual inflation rate was 1.0 per cent.

Crucially, the eurozone’s core inflation rate, which strips out volatile components such as energy, remained at 1.3 per cent.

The rise in prices comes after ECB Chief Christine Lagarde last month announced a review of policy that is to include a closer look at persistently low inflation in Europe despite major stimulus.

A central focus of the reassessment, the ECB’s first since 2003, will be whether the bank’s main objective of keeping inflation “close to, but below” two per cent remains relevant after years of anaemic price growth.

Lagarde said she also wanted to focus on “major changes” in society since the last review, including the challenges posed by climate change, technological advances and rising inequality.

ECB governors relaunched their “quantitative easing” (QE) bond-buying scheme at EUR20 billion (USD22 billion) per month from November in a bid to spur the prices.

Amounting to EUR2.6 trillion since 2015, the scheme was designed to pump cash through the financial system and encourage lending, in turn stimulating growth and inflation.

A cargo ship passes the buildings of the banking district on the river Main in Frankfurt, Germany. PHOTO: AP