ECONOMY

Consumer inflation set to drop to 2.5 pct

Headline inflation is seen slowing to around 2.5 percent year-on-year in November from 2.8 percent in the previous month on continued favorable base effects and softer fuel prices, analysts said yesterday. Economists expect the headline consumer inflation rate will range from 2.4 to 2.6 percent but core inflation, which excludes volatile energy, food, alcohol and tobacco prices, is seen remaining high in November. We expect a further significant drop in headline inflation to 2.4 percent year-on-year, with the energy component slashing some 0.2 percentage points (monthly basis) off headline inflation, said Platon Monokroussos, an economist at EFG Eurobank. The National Statistics Service (ESYE) is scheduled to announce November’s headline inflation rate on December 7. Headline inflation fell sharply to 2.8 percent year-on-year in October – the lowest level since July 2000 – from 3.6 percent in September, largely due to lower fuel prices. EU-harmonized inflation, the figure used by the European Union in its calculations, slowed to 3.2 percent from 4 percent. Eurostat, the European Union’s statistical agency, said last week that it sees eurozone consumer prices rising by an estimated 2.1 percent in November from a year earlier compared with October’s rate of 2.4 percent. Economist Charlie Robertson at ING Barings, said Greece’s inflation was likely to ease to 2.6 percent year-on-year in November. Low oil prices are contributing to lower inflation but on the other hand, this is an economy that is growing at around 4 percent and this is helping keep inflation higher than in other core Eurozone countries, he said. Greece had the fourth highest harmonized inflation rate in October, along with Spain, out of eurozone’s 12 members. Core inflation in Europe last month was 2.3 percent versus an estimated 3.6 percent in Greece, analysts said. ESYE does not officially provide core inflation data. Core inflation appears to be losing steam, decelerating to 3.6 percent year-on-year, from an average of 3.9 percent over the past six months. However, it continues to be at a relatively high level, said the National Bank in an economic report.