The latest Eurostat estimate confirms that Inflation in the eurozone has rebounded again in NovemberThis marks another month of some upward pressure on prices, just when it seemed the worst of the price increases was over. Although the figure is now close to the stability threshold set by the European Central Bank (ECB), the behavior of some key components suggests that the path to complete normalization will still be somewhat uneven.
In this context, Spain is once again above the euro area averagewith a more pronounced rise in prices than that observed in the single currency as a whole. The combination of still-high headline inflation in several countries, persistent underlying inflation, and uncertainty surrounding energy complicates monetary policy decisions. European Central Bank (ECB) and keeps the ECB on high alert.
Eurozone inflation reached 2,2% in November
According to the first estimate published by Eurostat, The eurozone's annual inflation rate rose by one tenth in November to 2,2%.This is its highest level since September and represents a slight departure from the ECB's medium-term price stability target of 2%.
With this movement, The region has now experienced three consecutive months with inflation above 2%.Between June and August, the index had managed to stay right at the target, and even dipped slightly below it in May, reaching 1,9%. The recent rebound, although moderate, indicates that the disinflation process is not linear and that pockets of pressure persist in various areas.
Eurostat emphasizes that the disparate behavior of the different components of the index This explains a good part of this progress: while some sectors are beginning to normalize, others are maintaining or reigniting the price surge, especially in the services sector.
The preliminary reading provides an initial snapshot of the situation, but The EU statistical office will publish the final data in mid-DecemberThis will allow us to refine the figures and confirm whether these trends continue.
Underlying inflation stable and pressure on services and food
Beyond the overall data, analysts pay special attention to the Underlying inflationThis index, which excludes the most volatile items such as energy, fresh food, alcohol, and tobacco, serves as a fundamental benchmark for ECB decisions. In November, The underlying rate remained at 2,4%., marking the third consecutive month without changes.
If the index is taken without energy, Inflation also stood at 2,4%.This reflects that the bulk of the tensions are concentrated in other areas. This behavior shows that, although some factors that drove price increases in previous years have eased, the adjustment is not yet complete, especially in segments most closely linked to domestic demand.
By component, Services once again became the main focus of pressureIn November, they registered a year-on-year increase of 3,5%, one-tenth of a percentage point higher than in October (3,4%), consolidating a trend of sustained price increases. This group includes activities such as hospitality, transportation, and professional services, where labor costs and other structural factors continue to be passed on to prices.
In parallel, Food, alcohol, and tobacco maintained an inflation rate of 2,5%.Meanwhile, within this category, fresh food showed a slightly more pronounced price increase, rising by approximately 3,3%, one-tenth of a percentage point higher than the previous month. Although far from the increases experienced during the height of the energy and raw materials crisis, consumers continue to notice high prices in their shopping baskets.
In the case of non-energy industrial goods —such as clothing, appliances, or household goods—, the inflation rate remained stable at 0,6%. This moderation indicates that supply chain tensions and logistics costs have eased, helping to contain this segment of the overall index.
Energy continues to fall, but with more gradual declines.
The other side of the coin continues to be EnergyEnergy prices again registered negative rates, although with a less pronounced decline than in previous months. In November, energy prices fell by 0,5% year-on-year, compared to the 0,9% drop recorded in October, representing a softening of the cost reduction.
This smaller decrease indicates that, while electricity and fuel prices are no longer at the extreme levels of two years ago, The contribution of energy to containing inflation is decreasing.As current data is compared with months in which energy had already stabilized, the statistical effect that helped reduce the overall rate loses strength.
The combination of energy that is still slightly cheaper than a year ago and services and food still on the rise This creates a fragile balance: the overall index is close to the ECB's target, but the internal structure of the data reveals that the fight against inflation is not completely over.
Marked differences between countries in the euro area
Eurostat data highlight significant differences between countries that share the single currencyAlthough the eurozone average stood at 2,2%, some member states continue to register significantly higher price increases, while others show very contained rates.
In the group of economies with higher inflation found Estonia (4,7%), Croatia (4,3%) y Austria (4,1%), which top the year-on-year increase rankings. They are followed by Latvia and Slovakia (3,8%), and Lithuania and Luxembourg (3,6%), all of them above the euro area average.
They are also above average Ireland (3,2%), Spain (3,1%), Greece (2,9%), and a group made up of Belgium, Germany and the Netherlandswith rates around 2,6%. Likewise, Malta and Slovenia They are positioned at 2,4%, slightly above the 2% target but still within a relatively contained range.
On the opposite side, the lowest inflation rates are registered in Cyprus (0,2%), France (0,8%), Italy (1,1%) y Finland (1,4%)In all these cases, price increases remain clearly below the eurozone average. PortugalFor its part, it is just below the average, at 2,1%.
This dispersion between countries reflects differences in the productive structure, in the composition of consumption and in the transfer of costsEconomies more dependent on imported energy or with tighter labor markets tend to experience more persistent pressures, while other partners are better able to contain price increases.
Spain: 3,1% inflation and a gap with the eurozone
In the case of Spain, Eurostat data indicates that Year-on-year inflation stood at 3,1% in November, one-tenth lower than in October, but still clearly above the eurozone average. This implies a unfavorable differential of about nine tenths with respect to the entire area.
Despite this slight monthly moderation, Spain continues to be among the countries with the highest price increases of the monetary union. The data confirms that, although energy tensions have eased and electricity has registered notable decreases compared to a year ago, other sections of the index, such as certain services or food, continue to push it upwards.
The national Consumer Price Index (CPI) data released by the National Institute of Statistics also indicates that Spanish inflation would have fallen to around 3%.This is aided by the drop in electricity costs thanks to wind power generation and more moderate gas prices. If confirmed, it would represent the first significant decrease after several months of increases.
This price behavior has a direct impact on the updating of pensions and other benefits linked to inflation. Based on recent figures, it is estimated that contributory pensions could increase by around 2,7% next year, which would mean approximately €35 more per month on average for a pension of just over €1.300.
Implications for ECB monetary policy
The new surge in headline inflation, coupled with the core inflation resilienceThis provides the European Central Bank with grounds to maintain a cautious stance. The institution has indicated on several occasions that it will only consider more profound changes to its interest rate policy when it sees clear and sustained signs that price pressures have dissipated.
In fact, the vice-president of the ECB, Luis de Guindos, has recently reiterated that, despite the evident moderation compared to the peak levels reached after the outbreak of the energy crisis, "The battle against inflation is not yet won."In his view, a premature relaxation of monetary policy "could create bigger problems" in the medium term, it could fuel a new price surge.
In this scenario, financial markets practically take it for granted that the ECB Governing Council will leave unchanged the money price at its next meeting, consolidating current levels until there is more clarity on the evolution of the economy and inflation in 2025.
The institution insists that it will act with prudence and dependence on dataAnalyzing month by month how the different components of the index and the labor market evolve. As long as the core inflation rate remains above 2% and the services sector does not show a more robust moderation, the scope for rate cuts will be limited.
The picture painted by the latest Eurostat figures is that of a eurozone that has left behind the most acute phase of the inflationary crisis, but is still grappling with pressure points in services and food and notable differences between countriesWith headline inflation at 2,2% and core inflation at 2,4%, the ECB's target appears close but not entirely guaranteed, and Spain, at 3,1%, continues to lag somewhat behind the average. Everything suggests that the coming months will remain crucial in confirming whether this uptick is merely a temporary setback on the path to moderation or a sign that the disinflation process will be longer and more complex than anticipated.
