Eurozone inflation on December is the highest since July, driven by rising energy and services costs. The increase was seen across major economies, with Germany and France facing higher inflation, while Italy saw a slight decline. Core inflation remained steady at 2.7%, signaling ongoing economic challenges.

Energy Prices and Services Drive Inflation Increase

Eurozone inflation hit 2.4% in December, its highest level since July, as reported by Eurostat. This marks the third consecutive monthly rise, up from 2.2% in November. The increase was primarily driven by rebounding energy prices and higher costs in the services sector.

Energy prices rose by 0.1% in December, reversing the -2% drop in November. Services inflation also edged up to 4% from 3.9% the previous month. In contrast, food, alcohol, and tobacco inflation slightly declined, as lower unprocessed food prices offset increases in processed foods and alcohol.

Mixed Trends Across Major Eurozone Economies

Inflation trends varied across the bloc’s largest economies:

• Germany: Inflation rose to 2.8% in December, up from 2.4% in November, fueled by higher food and energy prices.
• France: Inflation increased to 1.8%, from 1.7% the previous month, due to electricity tariff hikes and supply chain challenges.
• Italy: Inflation eased to 1.4% in December, down from 1.5%, reflecting declining prices for industrial goods and services.

The core inflation rate, which excludes volatile items like food and energy, remained steady at 2.7% for the fourth consecutive month.

Economic Challenges Continue Despite Mixed Signals

The latest inflation data highlights persistent economic pressures in the Eurozone. While Germany and France face rising costs tied to energy and supply chain issues, Italy’s decline in inflation reflects a less uniform trend across the bloc. Policymakers remain watchful as they assess the broader economic impact of these inflationary dynamics.