Eurozone inflation rose slightly in November, reducing the prospect of additional interest rate cuts from the European Central Bank, according to data released on Tuesday by Eurostat.
Consumer prices in the 20-nation currency bloc increased to 2.2%, up from 2.1% in October, keeping inflation close to the ECB’s 2% target where it has hovered for much of the year. The modest rise came as declining energy costs helped offset persistent domestic price pressures, especially in the services sector.
Core inflation, which excludes food and energy, remained unchanged at 2.4%. Services continued to record some of the fastest price increases, while durable goods showed muted inflation, suggesting that underlying pressures remain uneven across the bloc.
The latest figures support the ECB’s assessment that the bulk of the inflation surge has passed. With price growth stabilising, policymakers have signalled they can take their time before considering any further monetary policy moves. As a result, financial markets see almost no chance of a cut in the central bank’s 2% deposit rate when officials gather for their final meeting of the year on 18 December. Traders now assign just a one-in-four probability to any policy easing in 2025.
The ECB reduced rates by a cumulative two percentage points up to June but has held them steady since, waiting for clearer evidence on the direction of inflation.
Attention may shift early next year when inflation is projected to dip below the 2% level due to continued declines in energy costs. While the ECB typically looks past such energy-driven swings, some analysts caution that a prolonged period of unusually weak headline inflation could influence expectations and risk keeping price growth too low.
Natural gas prices have fallen more than 40% over the past year, and crude oil is down more than 10%, pointing to further energy-related deflation in the months ahead. In November, energy prices were 0.5% lower than a year earlier. Services inflation stood at 3.5%, and unprocessed food prices increased by 3.3%.
Non-energy industrial goods inflation was 0.6%, a category closely monitored amid concerns about the impact of cheap imports from China.
Despite the subdued inflation backdrop, many ECB officials maintain confidence that the eurozone remains on track for a stable return to the target. Their optimism is supported by economic data showing that the bloc is managing to navigate a period of high global uncertainty reasonably well.
While growth remains modest, surveys and statistical indicators point to expansion close to the region’s long-term potential of between 1% and 1.5%. The labour market also remains supportive, with separate Eurostat figures showing the jobless rate inching up only slightly to 6.4% in October.
