Shoppers at a delicatessen market stall in Milan, Italy on Thursday, December 28, 2023.
Bloomberg | Bloomberg | Good pictures
Eurozone core inflation rose to 2.9% in December from 2.4% in the previous month, although core inflation continued to moderate.
The annual print was slightly lower than the 3% forecast in a Reuters poll of economists.
Core inflation – which excludes energy, food, liquor and tobacco prices – eased to 3.4% last month from 3.6% in November.
The overall rise was expected due to fundamental effects from the energy market, with prices falling modestly. Energy prices fell 6.7% year-on-year in December and fell 11.5% in November.
Friday's data will add to the debate over the direction of the European Central Bank's policymaking, with markets expecting rate cuts to begin before the summer.
Michael Field, Morningstar's European market strategist, said in a note that the headline inflation hike was “fundamentally a technical one.”
“Oil prices have fallen sharply from their 2022 highs, but in December many European governments ran out of caps on energy prices, meaning prices paid by consumers rose, which weighed on inflation,” Field said.
Central bankers knew the spike was coming, so it didn't influence their decision-making, and January's print will be important to see if the downward trend resumes, Field said.