European Inflation Rose Thanks to Energy Price Increase

Europe appears to have seen off the deflation bugbear that has stalked it for the past couple of years.

Consumer prices across the 19 countries that use the euro grew in December at their fastest rate since Sept. 2013, official figures showed Wednesday.

A surge in oil prices contributed most to the near-doubling in the annual inflation rate to 1.1 percent from the previous month’s 0.6 percent.

Though higher inflation can eat into consumer spending, it can also help push up wages and stimulate economic activity in a region that has largely stagnated.

As such, the figures are likely to provide some relief to policymakers at the European Central Bank who have resorted to a raft of stimulus programs to get inflation back toward their target of just below 2 percent, considered most suitable for a healthy economy.

With the inflation rate still short of that target, the central bank is unlikely to give up on stimulus anytime soon.

via Mainichi

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza