January 5, 2018 / 10:45 AM / 7 months ago

Euro zone inflation slows as expected in Dec

BRUSSELS, Jan 5 (Reuters) - Euro zone inflation slowed as expected in December because of slower growth in the price of energy and unprocessed food, but the core inflation measure, which excludes these volatile components, held steady, data showed on Friday.

The European Union’s statistics office Eurostat estimated that consumer prices in the 19 countries sharing the euro rose 1.4 percent year-on-year last month, slowing from a 1.5 percent increase in November, as expected by economists.

This was mainly because energy prices grew 3.0 percent year-on-year in December, rather than 4.7 percent as in November and unprocessed food was 1.9 percent more expensive, rather than 2.4 percent as in November.

Without these two components, or what the European Central Bank calls core inflation, prices grew 1.1 percent year-on-year in December, the same as in November and October.

The ECB wants to keep headline inflation below, but close to two percent over the medium term and has been buying euro zone bonds on the secondary market to inject more cash in to the banking system and in this way boost credit to the economy.

From the start of this year, the bank halved its monthly bond purchases to 30 billion euros as the euro zone economy is powering ahead and unemployment is at its lowest in nine years, reducing the need for aggressive stimulus. (Reporting By Jan Strupczewski, Editing by William Maclean)

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