Inflation in Europe falls to 2.4% as interest rates pack a punch. But the economy has stalled
Europeans are again seeing some relief as inflation dropped to 2.4% in November, the lowest in more than two years
LONDON — Europeans again saw some relief as inflation dropped more than expected to 2.4% in November, the lowest in over two years, as plummeting energy costs have eased a cost-of-living crisis but higher interest rates squeeze the economy's ability to grow.
Inflation for the 20 countries using the euro currency fell from an annual 2.9% in October, according to numbers released Thursday by Eurostat, the European Union's statistics agency. It's a far cry from the peak of 10.6% in October 2022 as an energy crisis left Europe's households and businesses struggling to make ends meet.
The new figure is close to the European Central Bank's inflation target of 2% following a rapid series of interest rate hikes dating to summer 2022. But the tradeoff is stalled economic growth.
Much-watched core inflation, which excludes volatile fuel and food prices, fell beyond analysts' predictions — to 3.6% this month from 4.2% in October. It raises expectations that the ECB would hold rates steady for the second time in a row at its next meeting Dec. 14.
“It will hard for the ECB to ignore the extent to which the inflationary tide is turning,” said Andrew Kenningham, chief Europe economist for Capital Economics.
ECB President Christine Lagarde reiterated this week that the bank would make decisions based on the latest data and keep rates high as long as needed to reach its inflation goal.
Energy prices plunged 11.5% from November 2022. But risks remain from global conflicts, and while food prices in the eurozone have eased, they are still up 6.9% from a year earlier.
“This is not the time to start declaring victory,” Lagarde
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