Euro-Area Inflation Misses Estimates Even as Unemployment Falls

The European Central Bank got a reminder that the improving economy doesn’t guarantee a return of inflation to its goal, as unemployment unexpectedly dropped but consumer-price growth missed estimates.
The jobless rate slid to 8.8 percent in October, the lowest in almost nine years. Yet November inflation edged up to just 1.5 percent, missing the 1.6 percent prediction in Bloomberg survey, and underlying price pressures failed to pick up at all.
The latest price data outline the dilemma facing the ECB. Even with the region’s economy set for the fastest growth in a decade and the most broad-based expansion since 1997, a sustained price recovery remains some way off. While policy makers have acknowledged that this development warrants less additional monetary support, ECB President Mario Draghi has advocated a “patient and persistent” approach to exiting the central bank’s stimulus program.
Core inflation, which excludes volatile items such as food, energy and tobacco, remained at a tepid 0.9 percent in November, falling short of the 1 percent median estimate by economists.

Still, policy makers have expressed confidence that the economic recovery will eventually feed through to prices.
“All indications are that the recovery will continue for longer, and that would put pressure on wages and prices going forward,” Vitor Constancio said in an interview with Bloomberg Television on Wednesday. “It’s a gradual process, but we see it going in that direction.”
The ECB’s Governing Council next meets on Dec. 14. It announced in October that it will halve its current monthly pace of bond buying starting January and running until at least September.
— With assistance by Kristian Siedenburg, and Andre Tartar
Euro-Area Inflation Misses Estimates Even as Unemployment Falls Euro-Area Inflation Misses Estimates Even as Unemployment Falls Reviewed by Alexander Von Stern on 02:57:00 Rating: 5