Euro-Area Inflation Rises Less Than Expected; Unemployment At 8-Year Low

Prices in the Euro-area remains below expectation in November, even though the economy has managed to sustain growth in recent times. It is yet to substantially pressure prices.

The flash consumer price index which measures inflation climbed from 1.4 percent in October to 1.5 percent in November, according to European Union Statistics office. This was lower than the 1.6 percent expected by most economists but higher than the 1.4 percent recorded in October.

Core inflation which excludes volatile food and energy rose 0.9 percent, same as in October. Suggesting that rising commodity prices is aiding headline inflation, and a failure to extend production cuts later today by OPEC could impact the region price pressures as oil prices are projected to pullback.

However, the region unemployment rate improved to the lowest in almost 9 years in October, down from 8.9 percent recorded in September to 8.8 percent in October. The lowest since January 2009.

The continuous job creation and rising new orders are yet to translate to wage growth and rising consumer prices as the region looks to pressure prices towards 2 percent target.

While low inflation rate remains a concern, the economy is on track to grow at the fastest pace in almost a decade in 2017. Manufacturing sector continued to grow and create jobs to meet rising new orders.

“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 Euro remains in range, trading at $1.1836 to a US dollar.