Eurozone recession keeps inflation steady for now | Business| Economy and finance news from a German perspective | DW | 04.01.2013
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Eurozone recession keeps inflation steady for now

Due to weak economic activity, consumer prices in the eurozone in December grew at the same rate as in November, dispelling fears of spiking inflation. But the direction prices will take in 2013 remains highly uncertain.

The inflation rate in the 17-nation eurozone remained stuck at 2.2 percent in December - unchanged from the previous month of November, the European Union's statistics office, Destatis, said in a preliminary estimate published Friday.

The rise in consumer prices at the end of 2012 was lower than in the months of September and October, when the inflation rate came in at 2.6 and 2.5 percent respectively.

Analysts attributed the latest inflation data to a weakening of the eurozone economy at the end of 2012, but had predicted the rise in prices to be even lower at about 2.1 percent in earlier forecasts.

Therefore, the slightly higher-than-expected rate might fuel market concerns about renewed inflationary pressures in the eurozone as a result of the huge cash injections by the European Central Bank (ECB) at the end of 2011 and in early 2012. At the time, the ECB pumped billions of euros into the eurozone money market to shore up the bloc's ailing banks.

Fuel and energy costs were the main drivers of inflation in December, Destatis noted, as they rose by 5.2 percent. Also on the up were food prices as well as those for alcohol, tobacco and services, the office added.

As eurozone inflation in December remained close to the ECB's target of about 2 percent, the European Central Bank is expected to keep its benchmark interest rate at a historic low of 0.75 percent at a meeting next week.

uhe/rc (dpa, AP)

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