BRUSSELS: Inflation in the eurozone fell to its lowest level in more than two years in November, official data showed Thursday, raising hopes the European Central Bank could soon cut interest rates. Consumer prices in the 20-nation single currency bloc rose a lower-than-expected 2.4 percent in November from a year earlier, the EU’s official statistics agency said, the smallest annual gain since July 2021.

The consensus of analysts compiled by financial data firm FactSet had predicted inflation would slow to 2.7 percent in November, from 2.9 percent in October. The data will provide comfort to the European Central Bank (ECB), which has paused its unprecedented streak of interest rate hikes, although it has remained cautious about declaring victory over once red-hot inflation.

The painful hiking campaign has seen borrowing costs rise faster and further than ever before. “The larger-than-expected fall in inflation in November means it is becoming increasingly untenable for policymakers to claim that they are not even thinking about rate cuts,” said Andrew Kenningham, chief Europe economist at Capital Economics.

“We are now pencilling in a first cut for next June, rather than September,” he added. Bert Colijn, senior eurozone economist at ING, suggested the first rate cut “could well happen before the summer”. Eurozone inflation has steadily dropped since reaching a peak of 10.6 percent in October 2022 following the upheaval in markets wrought by Russia’s war on Ukraine. Inflation is still above the ECB’s two-percent target, however. Core inflation, which strips out volatile energy, food, alcohol and tobacco prices, and is the key inflation indicator for the ECB, also slowed in November to 3.6 percent from 4.2 percent in October.

The ECB held rates steady at its last meeting in October, but its chief, Christine Lagarde, has warned another energy shock could prompt inflation to jump again. “There will be a resurgence of probably a higher number going forwards and we should be expecting that,” Lagarde said on November 10. “The central bank worries about factors like wage growth and possible spikes in the energy market that could put inflation on a higher path again,” ING’s Colijn said. The rise in food and drink prices also slowed to 6.9 percent in November, compared with 7.4 percent in October, according to Eurostat. — AFP

Energy prices in the eurozone, however, dipped further in November, falling 11.5 percent following a drop of 11.2 percent the previous month. Belgium was the only country where consumer prices fell in November, dropping by 0.7 percent, according to Eurostat figures. Inflation slowed further in Germany, Europe’s biggest economy, to 2.3 percent in November from 3.0 percent in October, the agency’s data showed. — AFP