Current:Home > MarketsInflation in Europe falls to 2.4%. It shows interest rates are packing a punch-LoTradeCoin
Inflation in Europe falls to 2.4%. It shows interest rates are packing a punch
View Date:2025-01-14 06:02:49
LONDON (AP) — Europeans again saw some relief as inflation dropped to 2.4% in November, the lowest in more than two years, as plummeting energy costs have eased a cost-of-living crisis but higher interest rates squeeze the economy’s ability to grow.
Inflation for the 20 countries using the euro currency fell from an annual 2.9% in October, according to numbers released Thursday by Eurostat, the European Union’s statistics agency. It’s a far cry from the peak of 10.6% in October 2022 as an energy crisis left Europe’s households and businesses struggling to make ends meet.
The new figure is close to the European Central Bank’s inflation target of 2% following a rapid series of interest rate hikes dating to summer 2022. But the tradeoff is stalled economic growth.
With energy prices plunging 11.5% from a year earlier, it raises expectations that the ECB would hold rates steady for the second time in a row at its next meeting Dec. 14.
ECB President Christine Lagarde reiterated this week that the bank would make decisions based on the latest data and keep rates high as long as needed to reach its inflation goal.
There are risks ahead from global conflicts, and while food prices in the eurozone have eased, they are still up 6.9% from a year earlier.
“This is not the time to start declaring victory,” Lagarde said at a hearing in the European Parliament.
That’s on stark display in Germany, Europe’s largest economy, which saw annual inflation fall to 2.3% this month from 3% in October. But it is now dealing with a budget crisis — on top of being the world’s worst-performing major economy.
The energy crunch was especially hard on Germany, which relied on cheap natural gas from Russia to power its factories. Moscow largely cut off supplies to Europe after Western sanctions over the invasion of Ukraine, and companies are still facing the fallout.
Relief on their bills is at risk after a court ruling upended Germany’s spending plan and left the government scrambling to fill a 60 billion-euro (more than $65 billion) hole.
The larger eurozone has barely expanded this year, eking out 0.1% growth in the July-to-September quarter. On Wednesday, the OECD projected that this year’s muted growth of 0.6% would rise only to 0.9% next year.
“With a weakening economic outlook and disinflation, rate hikes should be off the table at the December meeting,” Carsten Brzeski, global head of macro at ING bank, said about the ECB, whose key rate has hit a record-high 4%.
“Given that the full impact of the tightening so far will still unfold in the coming months, the risk is even high that the ECB has already tightened too much,” he said in a research note.
veryGood! (1389)
Related
- Sting Says Sean Diddy Combs Allegations Don't Taint His Song
- After a county restricted transgender women in sports, a roller derby league said, ‘No way’
- After a county restricted transgender women in sports, a roller derby league said, ‘No way’
- Sean Diddy Combs' LA and Miami homes raided by law enforcement, officials say
- Republican Gabe Evans ousts Democratic US Rep. Yadira Caraveo in Colorado
- Who should be the NBA MVP? Making the case for the top 6 candidates
- Hunter Biden’s tax case heads to a California courtroom as his defense seeks to have it tossed out
- McDonald's to start selling Krispy Kreme donuts, with national rollout by 2026
- Katharine Hayhoe’s Post-Election Advice: Fight Fear, Embrace Hope and Work Together
- How will the Baltimore bridge collapse affect deliveries? What to know after ship collision
Ranking
- Amtrak service disrupted after fire near tracks in New York City
- If you see this, destroy it: USDA says to 'smash and scrape' these large invasive egg masses
- DMV outage reported nationwide, warnings sent to drivers with scheduled appointments
- Georgia senators again push conservative aims for schools
- Auburn surges, while Kansas remains No. 1 in the USA TODAY Sports men's basketball poll
- Singer Duffy Breaks 3-Year Social Media Silence After Detailing Rape and Kidnapping
- Time, money, lost business are part of hefty price tag to rebuild critical Baltimore bridge
- The Daily Money: Dollar Tree to charge up to $7
Recommendation
-
Oregon's Dan Lanning, Indiana's Curt Cignetti pocket big bonuses after Week 11 wins
-
Sinking Coastal Lands Will Exacerbate the Flooding from Sea Level Rise in 24 US Cities, New Research Shows
-
NFL to play Christmas doubleheader despite holiday landing on Wednesday in 2024
-
Kristen Doute's Nipple-Pinching Drama on The Valley Explained
-
One person is dead after a shooting at Tuskegee University
-
11-year-old killed in snowmobile crash in northern Maine
-
Halle Berry reveals perimenopause was misdiagnosed as the 'worst case of herpes'
-
A woman accuses a schoolmate of raping her at age 12. The school system says she is making it up.