Euro zone inflation is expected to hold steady in November, unchanged from the previous month. But with little to no growth, pressure remainson the European Central Bank to increase its massive bond-buying program to boost prices at its monthly meeting on Thursday.
Eurostat said consumer prices in the 19 countries sharing the euro stayed at 0.1 percent in the year to November in its flash estimate, as lower oil prices helped cap any growth in inflation in the currency bloc.
Emmanuel Dunand | AFP | Getty Images
European Central Bank President Mario Draghi.
The figures, which were weaker than expected, give a "final green light" to ECB President Mario Draghi to both increase the pace of its trillion-euro asset purchases and cut its deposit rate at Thursday's policy meeting according to chief European economist at Capital Economics, Jonathan Loynes.
"Note that the headline inflation rate will rise quite sharply in the next few months on the anniversary of more big falls in oil prices. By January, it may be over 1.0 percent," said Loynes.
The unchanged headline rate of 0.1 percent is a downside surprise, given that energy inflation was always likely to rise on the anniversary of a big drop in oil prices November last year. But this was offset by a slight fall in food inflation and, more notably, a drop in core inflation from October's 1.1 percent to 0.9 percent.
The ECB is widely expected to formally extend the tenure of its asset purchases, which it launched in March, by bulking up on the 60 billion euros ($63 billion) per month and possibly cut the deposit rate on Thursday.
"As such, the ECB is likely to remain nervous that a further prolonged period of below-target inflation will lead to a bigger drop in inflation expectations and take action tomorrow accordingly," Loynes added.
Patrick Abboud
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