Tuuli Koivu, research analyst at Nordea Markets, point out that the Eurozone’s core inflation was below expectations at 1.0% in November, while the unemployment has remained unchanged at 8.1% since July.
Key Quotes
“According to the preliminary data, service price inflation was weak both in France and Germany. Although the German weakness was partly due to the volatile package holiday component, the general weakness indicates that the price pressures have not yet followed the higher wage increases as we had expected. The headline inflation declined to 2.0% mainly because of the recent decline in the oil price.”
“Unemployment has stopped declining
The worrying factor is that the unemployment rate has remained unchanged at 8.1% since July. Although employment numbers give a somewhat more positive picture of the outlook, it seems that the stickiness in the Euro-area labour market has started to hit the economy. Furthermore, slower improvements in the labour market are expected to reduce the pace of wage inflation.”
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