BRUSSELS: Inflation in the Eurozone jumped in December to the highest level in more than three years on the back of surging oil prices, official EU figures showed on Wednesday.
The 1.1% figure for the 19-country single currency area nearly doubled November’s 0.6% in a boost for the fragile economic recovery.
The news edges inflation closer to the European Central Bank’s prized inflation target although it is still a way off the desired 2.0%.
Inflation reflects underlying consumer demand and is a key sign of health in a Eurozone economy already facing uncertainty over Brexit and the election of Donald Trump.
The last time inflation was at the same level was in September 2013, the European Union’s statistics agency Eurostat said.
The latest figure was boosted sharply by the rise in energy prices triggered by oil cartel OPEC’s December decision to cut output.
Analyst Howard Archer said the latest figure was “more than originally expected but perhaps less than suspected after German inflation jumped to 1.7 percent.”
France and Spain also showed inflation advancing in data released Tuesday, the same day as Germany, but analysts warned that an overall EU is still far off.
Italy saw consumer prices fall in 2016, the first year of deflation since 1959, according to official data published Wednesday.
The figure compounds fears for the Italian economy as it struggles to stave off a banking crisis.
For the Eurozone generally, Archer said energy inflation, at 2.5%, was responsible for the most of the rise.
Core inflation -stripped of volatile food and oil- only edged up to 0.9% from 0.8% in November, he noted.
Analysts surveyed by financial services provider Factset had predicted 1% inflation for the Eurozone.
The Eurozone’s low inflation rate has been a huge worry for the ECB as it pushes through a massive stimulus programme to get the faltering economy back on track.
ECB chief Mario Draghi has said inflation would reach its target level by 2018 or 2019.
Published in The Express Tribune, January 5th, 2017.