Eurozone inflation set to drop to 2.8 per cent in December

Eurozone inflation is expected to drop to 2.8 per cent in December, its first fall in four months but still above the level favoured by the European Central Bank for price stability, official figures showed yesterday.

Eurostat, the European Union’s statistical agency, said it estimated annual inflation in the 17-nation eurozone at 2.8 per cent, compared to three per cent in November.

Inflation in the euro nations hit three per cent in September, up from 2.5 per cent in August, and remained stable through October and November.

The December estimate, if confirmed, will mark the 13th consecutive month that inflation has remained above the ECB’s target for price stability of below or close to two per cent. In France, the government this week forecast a slowdown in price hikes in 2012 to 1.5 per cent against 2.4 per cent in 2011.

In Germany, inflation hit a high of 2.6 per cent in September before declining.

In Spain, annual inflation fell to 2.4 per cent in December against 2.9 per cent the previous month.

The December estimate for the entire eurozone could reassure the ECB, which next meets January 12.

The central bank lowered its main interest rate in November and in December by 0.25 per cent each time, to an historic low of one per cent.

Eurostat will release its final inflation figure for December on January 17.