December Inflation Reaches 2.4%, Driven by Energy and Services Prices
Eurozone inflation rose for the third consecutive month in December, reaching 2.4% year-on-year, as confirmed by Eurostat. This figure aligns with preliminary estimates and marks the highest inflation level since July, up from 2.2% in November.
The increase was primarily influenced by base effects, as inflation rates no longer account for the steep energy price drops witnessed last year. Energy costs rose by 0.1% in December, compared to a -2% decline in November, signaling the first positive change since July. Services inflation also contributed, edging up to 4%, from 3.9% the previous month.
On the contrary, inflation in food, alcohol, and tobacco eased slightly. Although prices for processed foods, tobacco, and alcohol rose, this was offset by falling prices for unprocessed foods.
Country-Specific Inflation Trends Show Mixed Results
Among major Eurozone economies, inflation rates varied in December:
- Germany: Inflation climbed to 2.8%, up from 2.4% in November, driven by higher food, services, and sluggish reductions in energy prices.
- France: Inflation inched up to 1.8% from 1.7%, influenced by rising electricity tariffs and persistent supply chain challenges.
- Italy: Inflation eased to 1.4%, down from 1.5%, reflecting a drop in industrial goods and services prices.
The Eurozone’s annual core inflation rate, which excludes volatile components such as energy, alcohol, tobacco, and food, remained steady at 2.7% for the fourth consecutive month, meeting analyst expectations.
Factors Behind Inflationary Pressures in Germany and France
Germany’s inflation surge stems from rising costs in food and services, coupled with slower reductions in energy prices. France, facing similar pressures, has been affected by increased electricity tariffs and ongoing economic challenges such as supply chain disruptions and weakened consumer confidence.
In contrast, Italy’s inflation decline reflects falling prices in industrial goods and services, offering some relief in the broader Eurozone context.
Outlook and Challenges
The steady rise in Eurozone inflation highlights lingering economic pressures, including energy price volatility and service sector price increases. With core inflation holding firm, policymakers and businesses must navigate an environment of uneven recovery and persistent cost challenges across the region.