Inflation drops sharply in Europe

London, Jan 6 (SocialNews.XYZ) Inflation in Europe continued to decline in December as energy prices rose at a slower pace, the media reported.

Prices across the 19 countries that used the euro in 2022 increased at an annual rate of 9.2 per cent in December, the European Union's statistical office said on Friday, CNN reported.

In November, prices rose 10.1 per cent. Annual inflation in the euro area reached a record high of 10.6 per cent in October.

The pullback in headline inflation is a positive development for households and businesses that have been battered by high costs.

But prices in many sectors of the economy are still rising at an uncomfortable clip, underscoring the tough task ahead for policymakers, CNN reported.

While energy inflation fell to 25.7 per cent in December, compared to 34.9 per cent in November, the cost of food, alcohol and tobacco climbed 13.8 per cent, versus 13.6 per cent the previous month. Services inflation rose to 4.4 per cent from 4.2 per cent.

Core inflation, which strips out volatile food and energy prices, reached 5.2 per cent in December, up from 5 per cent in November.

"There can therefore be no talk of a sustained weakening of inflation," Ralph Solveen, a senior economist at Germany's Commerzbank, said in a research note, CNN reported.

The data is likely to encourage the European Central Bank to stick with its policy of raising borrowing costs.

The central bank, which aggressively hiked interest rates last year, has indicated it will continue with increases in 2023.

"We have more ground to cover," ECB President Christine Lagarde said last month, noting inflation "remains far too high and is projected to stay above the target for too long".

The European Central Bank aims to keep inflation near 2 per cent, CNN reported.

Source: IANS