Inflation in the eurozone fell to its lowest level in more than two years in November, final data from European statistics agency Eurostat showed on Tuesday. The inflation rate in the 20 countries that use the euro as an official currency came in at 2.4 per cent for the month of November, in line with expectations but sharply down from October’s 2.9 per cent.
The fall in inflation was mainly attributable to much weaker energy prices, which were sharply down to 11.5 per cent in November from 11.2 in the previous month. Core inflation, which leaves out volatile food, energy, alcohol and tobacco prices, also decreased, coming in at an annual rate of 3.6 per cent in November from October’s 4.2 per cent.
Despite the notable fall, inflation in the region is still above the European Central Bank’s medium-term inflation target of two per cent. The bank started raising its key interest rates in July 2022 to combat runaway inflation, even though it has recently left them unchanged.
Meanwhile, in the US, existing home sales unexpectedly rose in November, but further gains could fail to come through due to the persistent shortage of properties on the market. According to a report by the National Association of Realtors (NAR) released on Wednesday, existing-home sales rose by 0.8 per cent in November from the previous month to a seasonally adjusted annual rate of 3.82 million, bringing to an end a series of five months of decreases. On an annual basis, sales plummeted by 7.3 per cent.
The median home price for existing properties was up by four per cent annually to $387,600 (€353,690) in the reported month. Lawrence Yun, a chief economist at NAR, said the latest weakness still reflects the situation in most of October when mortgage rates were at a 20-year high.
Finally, consumer confidence in Germany rose for the second month in a row heading into January, as Germans are optimistic that their incomes will rise even though the economic outlook is still subdued.
The German GfK Consumer Confidence Index, a measure of households’ willingness to buy, income expectations and business cycle expectations, rose to -25.1 points heading into January, increasing by 2.5 points from the month before, suggesting consumers in Europe’s biggest economy are feeling more optimistic.
“It remains to be seen whether the current increase represents the start of a sustained recovery in consumer sentiment,” NIM consumer expert Rolf Burkl said.
This article does not constitute legal and/or financial advice and is being issued for information purposes only by Bank of Valletta plc, 58, Zachary Street, Valletta. Bank of Valletta is a public limited company regulated by the MFSA and is licensed to carry out the business of banking and investment services in terms of the Banking Act (Cap. 371 of the Laws of Malta) and the Investment Services Act (Cap. 370 of the Laws of Malta).