Euro Area Inflation Reached ECB Target: Economic Stability

Inflation Data Released in the Eurozone

In December, Eurozone consumer prices increased by %2 compared to the previous year. This rate aligns with economists' forecasts, indicating a monthly increase of %0.2. The annual inflation rate in November was recorded at %2.1.

Notable Increase in Core Inflation

In December, core inflation showed an increase of %2.3, while the easing in service inflation is noteworthy. These inflation rates, which have maintained the annual %2 target for more than six months, prepare the ground for the European Central Bank (ECB) to keep borrowing costs stable. Experts do not expect any additional measures from the ECB in the foreseeable future.

Investor Expectations and Monetary Policy

Investors are raising their expectations for monetary easing, pricing in a five basis point cut by September 2023. While ECB policymakers indicate that inflation has been brought under control, they state they will take cautious steps due to global economic uncertainties.

Impact of Growth and Wage Increases

An increase in service inflation continues to be a concern due to unexpectedly strong wage increases. The most comprehensive measure of wage increases remained at %4 in the third quarter, raising concerns regarding price stability.