Consumer prices in Germany unexpectedly surged in December, driven by rising food and service costs. In contrast, France experienced a more stable inflation rate. Experts, however, predict persistent price pressures in the Eurozone.
Germany's inflation rate climbed to 2.6% at year-end, the highest since January 2023, while France's rate remained at a lower 1.3%, according to the national statistics office Insee in Paris.
The disparity is largely attributed to food prices, which stagnated in France compared to a 2.0% increase in Germany. Notably, vegetable and fruit prices decreased in France, as noted by Daniel Hartmann, chief economist at asset manager Bantleon. Additionally, service costs rose by 2.3% in France, significantly lower than Germany's 4.1% increase. German energy prices fell by 1.7%, while they rose by 1.2% in France.
Experts indicate that overall price pressures in the Eurozone remain upward. Cyrus de la Rubia, chief economist at Hamburg Commercial Bank, highlighted that inflation in Germany and Spain has risen sharply. Economists anticipate the Eurozone inflation rate for December to reach 2.4%, up from 2.2% in November. Eurostat is set to release a preliminary estimate at 11:00 AM.
The European Central Bank (ECB) aims for a 2% inflation target. De la Rubia noted that the current trend may not deter the ECB from lowering interest rates again at the end of January. He suggested that the bank could argue for maintaining a restrictive interest level, even after another potential cut. The ECB's decision will also depend on January's economic developments, with new inflation data being released just before the upcoming rate decision.