Inflation in the eurozone accelerated to the highest level on record in November, preliminary data by Eurostat showed on Tuesday, prompting further questions about what the European Central Bank’s next move will be with respect to its monetary policy.
Annual inflation advanced to 4.9 per cent in November from 4.1 per cent in October.
The rate was above economists’ forecast of 4.5 per cent. Likewise, core inflation, that excludes volatile items like energy, food, alcohol and tobacco, increased to a record 2.6 per cent from two per cent in October. Core inflation was forecast to advance to 2.3 per cent.
High gas prices and the cost of imported goods were blamed for the spike in inflation. Energy prices, including oil and gas, jumped by 27 per cent from November 2020, Eurostat said.
Meanwhile, in the US, the Federal Reserve’s Beige Book reported that economic activity grew at a modest to moderate pace in most Federal Reserve districts during October and early November.
High gas prices and the cost of imported goods were blamed for the spike in inflation in the eurozone.- Bank of Valletta
“Prices rose at a moderate to robust pace, with price hikes widespread across sectors of the economy,” the survey found.
Input costs increases were “wide-ranging” due to strong demand for raw materials, logistical challenges and labour market tightness, the report said. Tight labour markets meant wages were also rising at a “robust” pace across most of the Fed’s 12 districts, according to the report. One silver lining was that some inputs were becoming more widely available, easing some of the pressure on prices.
Finally, German unemployment declined by more than expected in November, data published by the Federal Labour Agency showed on Tuesday. The number of people out of work decreased by 34,000 from October, when unemployment was down by 40,000. Economists had forecast a monthly fall of 25,000.
As a result, the unemployment rate fell to 5.3 per cent in November from 5.4 per cent in October. The rate came in line with economists’ average forecasts.
“The recovery of the last few months has continued on the labour market,” Federal Employment Agency CEO Detlef Scheele, said.
Consequences of the current, worrying coronavirus situation in Germany have hardly shown up so far.
This article was prepared by Bank of Valletta plc for general information purposes only.