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(MNI) London

Eurozone inflation exceeded expectations in December, rising by 0.4% over November to hit a new euro-era annual high of 5.0%, according to data released by Eurostat on Friday. Analysts had expected a modest deceleration in HICP last month from the 4.9% pace recorded in November.

Energy prices remain the biggest contributor to accelerating inflation, rising by an annual rate of 26.0% in December, a slight reduction from the 27.5% surge recorded in November. Excluding food, alcohol and tobacco, core inflation also rose by 0.4% between November and December, leaving the annual rate at 2.6%, matching the November result.

The relentless rise in eurozone inflation may raise questions over the European Central Bank’s insistence that rates are “unlikely” to rise in 2022. At the last governing council meeting, ECB rate setters agreed to reduce the pace of asset purchases over the first quarter, with an eye toward ending the emergency quantitative easing programme at the end of March. However, ECB President Christine Lagarde acknowledged that not all governing council members agreed with each element of the ECB’s most recent statement.

MNI London Bureau | +44 203-865-3812 | les.commons@marketnews.com
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MNI London Bureau | +44 203-865-3812 | les.commons@marketnews.com
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