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Eurozone inflation hits record high of 5%; highest since 1997

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Consumer prices in the eurozone continue to rise, with inflation hitting a record high of 5% in December compared with a year earlier. Inflation is now at the highest level in the eurozone since recordkeeping began in 1997 and broke November’s all-time high of 4.9%.

Eurozone inflation hits record high of 5%; highest since 1997
Consumer prices in the eurozone continue to rise, with inflation hitting a record high of 5% in December compared with a year earlier. According to the numbers released by the European Union's statistical office on Friday, the increase was mostly due to higher energy prices.
Inflation is now at the highest level in the eurozone since recordkeeping began in 1997 and broke November’s all-time high of 4.9%.
Soaring prices are compounding problems for European Central Bank policymakers who have been keeping interest rates at ultra-low levels to stimulate the economy amid the global pandemic.
The euro ticked down after the data and settled just above the flotation mark against the dollar with a modest 0.04% rise to $1.1304.
"Normally, a high inflation reading implies a currency to rise because its central bank tends to raise interest rates accordingly," commented Ulrich Leuchtmann, head of FX and commodity research at Commerzbank in Frankfurt.
"But 'normally' does not apply in this case to the euro because the ECB is on 'wait and see'," he said.
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Eurozone policymakers have repeatedly said they expect inflation to gradually slow down in 2022 and expressed confidence a rate hike will likely prove unnecessary this year.
"There is no reason in this case to get bullish on the euro as the surprise was not large enough to change expectations, one would need a massive surprise but this data is not large enough," Leuchtmann argued.
Earlier data showed German exports grew in November despite persisting supply bottlenecks in manufacturing, while industrial output fell.
(With inputs from agency)
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