"Eurozone inflation edged up to 2.2% in November, a slight rise from the 2.1% recorded in October. The headline number continues to hover close to the European Central Bank's 2% target, but the underlying picture remains uneven. For the wider eurozone economy, today's data suggests that the disinflation trend is intact but still fragile. Growth across the bloc remains modest, with forecasts for next year centred near 1.2%."
"This combination - cool inflation but weak activity - places the ECB in a delicate position. Policymakers may feel more comfortable that inflation is bending in the right direction, yet the persistence of services-led price pressure makes a toward aggressive rate cuts unlikely. The ECB will not cut when they meet for a final time this year in December, and it would be a surprise if they cut again at all."
"Businesses across the single market will take some encouragement from continued low inflation. Lower goods and energy-related inflation reduces input-cost volatility, helping firms rebuild margins and plan investment with a little more confidence. However, higher wage costs and subdued consumer demand continue to weigh on sentiment, especially in sectors sensitive to domestic spending or international trade. For households, the picture is cautiously positive. Price rises are no longer eroding purchasing power at the pace seen during the inflation peak."
Eurozone inflation rose to 2.2% in November, up from 2.1% in October and remaining close to the ECB's 2% target. Disinflation across the bloc remains intact but fragile, with growth modest and forecasts for next year around 1.2%. The mix of cooling inflation and weak activity leaves the ECB in a delicate position, and services-led price pressures make aggressive rate cuts unlikely. The ECB is expected not to cut rates at its December meeting and further cuts appear unlikely. Businesses benefit from lower goods and energy inflation, while higher wage costs and weak demand dampen sentiment. Households see stabilising real incomes but still face elevated living costs, especially for services.
Read at London Business News | Londonlovesbusiness.com
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