A man rides a bicycle on a snow-covered street after snowfall in Frankfurt am Main, western Germany, on December 29, 2024.
Kirill Kudryavtsev | AFP | Getty Images
Annual inflation rates in the euro zone rose for the third month in a row, reaching 2.4% in December, statistics agency Eurostat reported Tuesday.
The reading was in line with expectations of economists polled by Reuters and represented an increase from the revised reading of 2.2% in 2019. November. Core inflation held steady at 2.7% for the fourth month in a row, also in line with economists' expectations, while services inflation rose to 4% from 3.9%.
Headline inflation was widely expected to accelerate after hitting a low of 1.7% in September, as the base effects from lower energy prices fade. The full extent of the increases in the reading – along with the continuation of services and core inflation – will be closely watched by the European Central Bank, which markets currently expect to cut interest rates from 3% to 2% across several cuts this year.
The pace of price increases in Germany, the largest economy in the euro zone, Achieved 2.9% higher than expected In December, according to figures published separately this week. Meanwhile, inflation in France was 1.8% last month, below a Reuters poll's forecast of 1.9%.
ECB policymakers would not be overly concerned about a hotter monthly inflation reading, as long as it is broadly in line with expectations, Hague Bathgate, director of Callanish Capital, told CNBC's “Squawk Box Europe.”
“There is now a lot more predictability in a lot of the data series that we're seeing… the direction of the movement of (lower) interest rates in Europe is much more predictable than in the UK, for example,” Bathgate said on Tuesday.
This is a breaking news story and will be updated soon.
