Inflation in the eurozone increased to the highest level in fivemonths

The inflation rate in the Eurozone increased for the third month in a row and reached a five-month high of 2.4 percent in December. The result fits the expectations of the market and exceeds the established European Central Bank (ECB) target of

two percent. Grocery store. Image illustrative. Photo: Eero Vabamägi

The level of inflation in the eurozone increases for the third month in a row and in December reached a five-month maximum – 2.4 percent. The result is in line with market expectations and exceeds the European Central Bank (ECB) target

of two percent.

Basic inflation, which excludes volatile components, such as food and energy, remained stable at the level of 2.7 percent for the fourth month. It is notable that inflation of services has risen to four percent, which indicates the preservation of price pressure in this sector.

In response to the tendency to reduce prices the ECB has gradually reduced interest rates from four percent to three percent. But the latest increase in inflation could force the ECB to take a more cautious approach to further cuts. Analysts suggest that the central bank could prefer smaller reductions by 25 basis pointsinstead ofmoreaggressivesteps,CNBCwrote

.

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