-Howard Archer, HIS Markit
Consumer prices in the Euro zone climbed to a 38-Month high in December in line with analysts' expectations, official figures revealed on Wednesday.
According to Eurostat, the CPI came in at an annualized rate of 1.1%, up from a 0.6% rise in November, and a 0.2% increase registered in the same period year ago. That was the highest reading since October 2013. On a yearly basis, the so-called core CPI, which excludes food, energy, alcohol and tobacco prices, came in at 0.9%, up from the prior month' 0.8%, while underlying prices advanced 0.4%. Data also showed, the main driver of inflation rise were energy prices, which advanced 2.6% year-over-year in December, up from a 1.1% slump in the past month. In the meantime, non-energy goods prices remained low, falling to 0.3% from 0.5% in annual terms. Nevertheless, the service sector CPI edged fractionally higher to 1.3% from 1.1% in November. In addition, a report showed the inflation rate advanced amid higher prices of transport, vegetables and heating oil, which added 0.21%, 0.07% and 0.05% to the headline figure, respectively.
In the short term consumer prices are likely to fall in January due to seasonal factors. However, the inflation rate is expected to climb significantly above 1.5% going further.
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