According to Eurostat, Wednesday’s November consumer price index was 10% higher than a year ago in 19 euro-using countries.
This was a decrease of 10.6% from October and the first decrease since June 2021.
This was due to the fact that prices for food, tobacco, and alcohol rose faster than normal, at 13.6% per year, while energy prices fell to a 34.9% annual rate of growth from an incredible 41.5% in October.
High energy prices are causing out-of-control inflation. This is due to Russia cutting off natural gas in large quantities over the war in Ukraine, as well as bottlenecks in supply of raw materials and rebounding demand following the end of COVID-19 Pandemic restrictions.
Rising prices have impacted economies around the world, but Europe has suffered the most because it is dependent on Russian natural gas. Gazprom, its exporter, has reduced that dependence to a trickle.
European leaders claim it’s energy war because of their support for Ukraine.
Natural gas prices are now at an all-time low as Europe has mostly filled its winter storage with supplies from other European countries. The mild weather has also reduced the possibility of natural gas shortages during heating season.
According to the November inflation data, it is likely that the European Central Bank will slow down its rapid increase in interest rates.
The bank is expected to go with a half-percentage-point boost at its Dec. 15 meeting, instead of another rise of three-quarters of a point made at its last two meetings, according to economists at Oxford Economics.
They stated that inflation “should not remain elevated” while easing energy prices means “that today’s data will very likely follow by a gradual decrease of inflation for the eurozone.” Christine Lagarde, President of the ECB, said Monday that she doesn’t believe inflation has reached its peak after hitting record highs and that the bank won’t stop raising interest rates to counter those price spikes.
The bank has set a 2% inflation target.
She told European legislators that she does not believe we have reached peak inflation.
Lagarde stated that this means the central bank will “continue tame inflation using all the tools we have”, primarily through interest rate hikes.