Agência para o Investimento e Comércio Externo de Portugal


Euro Area: Inflation soars in November amid surging energy prices

Harmonized inflation came in at 4.9% in November, above Octobers 4.1% reading and marking the highest print since records began in 1997. Inflation therefore moved further above the European Central Banks target rate of 2.0%. Novembers result was due to an increase in prices across the board, with energy and services prices accelerating the most.

On a monthly basis, harmonized prices rose 0.45% in November, below Octobers 0.85% increase. Core inflation, which excludes volatile energy and unprocessed foods prices, jumped to 2.6% in November from Octobers 2.1%, marking the highest print since October 2008.


Commenting on the short-term outlook for inflation, Bert Colijn, senior economist at ING, stated:

“All in all, we dont expect inflation to drop much below 2.0% for late 2022. While second-round effects are largely absent for now, medium-term price pressures are increasing and we expect wage growth to rebound over the course of next year. While ECB tightening is not exactly helpful in increasing gas reserves or solving bottlenecks in Asian ports, it is relevant when it comes to medium-term price pressures. Of course, new restrictive measures against the virus and Omicron uncertainty add downside risks to the outlook but for now, we still expect the ECB to announce an end to its emergency PEPP program for March and expectations of a first rate hike are moving closer to the beginning of 2023.”