Inflation in Europe slows again, hitting 9.2% in December

Europe ended a bad year for inflation with some relief as price gains eased again, though they still rose a painful 9.2 per cent in December, according to data released on Friday.

The latest numbers are a sign that the worst might be over for weary consumers battling with the surging cost of living.

The consumer price index for the 19 countries that use the euro currency rose in December at the slowest pace since August, said European Union statistics agency Eurostat. Croatia joined the eurozone on January 1.

It was the second straight decline in inflation since June 2021. In November, inflation dipped to 10.1 per cent after peaking at a record 10.6 per cent in the previous month.

Consumers across Europe have been plagued by surging energy costs since Russia launched its war in Ukraine in February, which played havoc with oil and natural gas markets and have been the main driver of inflation.

The latest numbers indicate that the energy costs are easing off for now. Energy price rises slowed to 25.7 per cent, down from after November’s 34.9 per cent gain and 41.5 per cent in October.

Natural gas prices have slipped from all-time highs this summer as Europe has largely filled its storage for winter with supplies from other countries while warmer-than-usual weather has reduced fears of a shortage during the heating season.

Food price gains, the other big factor that’s been driving up European inflation, held fairly steady. Prices for food, alcohol and tobacco rose at a 13.8 per cent annual pace in December, a smidgen higher than the month before.

Inflation also has been worsened by bottlenecks in supplies of raw materials and parts amid rebounding global consumer demand after Covid-19 pandemic restrictions ended.

Soaring costs for energy and food have threatened a recession and fed labour unrest as wages fail to keep pace with the price rises. Across Europe, subway staff, hospital workers, train drivers, postal workers and air traffic controllers have gone on strike, threatening political turmoil.

Central banks have been battling inflation by hiking interest rates, while governments have offered relief on high energy bills.

Last month, the European Central Bank raised its benchmark rate by half a point, slowing its record pace of interest rate increases slightly but promising that more hikes are on the way. It matched actions taken by counterparts in the U.S., United Kingdom and elsewhere.

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