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Eurozone inflation rose in December as energy prices slightly ticked up, official data showed Tuesday, which experts said will likely push the European Central Bank to pursue its rate-cutting cycle more cautiously.
Consumer prices picked up to 2.4 percent last month, as predicted by analysts for Bloomberg and financial data firm FactSet, and up from 2.2 percent in November.
Core inflation — which strips out volatile energy, food, alcohol and tobacco prices and is a key indicator for the ECB — was stable at 2.7 percent.
The ECB is still expected to cut interest rates at the next monetary policy meeting on January 30, but with price pressures still present in the eurozone it will need to tread carefully despite the signs of economic weakness, analysts say.
“We project that the ECB will only cut rates once in the first half of this year, with additional cuts concentrated in the latter half of 2025,” said Charlie Cornes, senior economist at UK-based Centre for Economics and Business Research.
December’s rise comes after inflation in the 20-nation single currency area fell to a three-year low of 1.7 percent in September. Consumer prices have since been inching back up to above the ECB’s target of two percent, the exact figure hit in October.
The higher reading is due to energy prices rising by 0.1 percent in December, a significant uptick after a fall of two percent in November.
Tuesday’s data showed food and alcohol prices were stable at 2.7 percent last month, while services inflation rose by four percent last month, up slightly from 3.9 percent in November.
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