LONDON (AP) 鈥� Europeans again saw some relief as inflation dropped more than expected to 2.4% in November, the lowest in more than two years, as have eased a cost-of-living crisis but higher interest rates squeeze the economy's ability to grow.
Inflation for the 20 countries using the euro currency fell from an , according to numbers released Thursday by Eurostat, the European Union's statistics agency. It's a far cry from the peak of 10.6% in October 2022 as an left Europe's households and businesses struggling to make ends meet.
The new figure is close to the European Central Bank's inflation target of 2% following a rapid series of interest rate hikes dating to summer 2022. But the tradeoff is stalled economic growth.
Much-watched core inflation, which excludes volatile fuel and food prices, fell beyond analysts' predictions 鈥� to 3.6% this month from 4.2% in October. It raises expectations that the for the second time in a row at its next meeting Dec. 14.
鈥淚t will hard for the ECB to ignore the extent to which the inflationary tide is turning,鈥� said Andrew Kenningham, chief Europe economist for Capital Economics.
ECB President Christine Lagarde reiterated this week that the bank would make decisions based on the latest data and keep rates high as long as needed to reach its inflation goal.
Energy prices plunged 11.5% from November 2022. But risks remain from , and while food prices in the eurozone have eased, they are still up 6.9% from a year earlier.
鈥淭his is not the time to start declaring victory,鈥� Lagarde said Monday during a hearing in the European Parliament.
That's on stark display in Germany, Europe's largest economy, which saw annual inflation fall to 2.3% this month from 3% in October. But it is now 鈥� on top of being the world's when it comes to growth.
The energy crunch was especially hard on Germany, which relied on cheap natural gas from Russia to power its factories. to Europe following Western sanctions over the invasion of Ukraine, and companies are still facing the fallout.
Relief on their bills is at risk after a and left the government scrambling to fill a 60 billion-euro (more than $65 billion) hole.
Meanwhile, the larger eurozone economy has stalled this year, even shrinking 0.1% in the July-to-September quarter, according to Eurostat. On Wednesday, that the full year's muted growth of 0.6% would rise only to 0.9% in 2024.
鈥淲ith a weakening economic outlook and disinflation, rate hikes should be off the table at the December meeting,鈥� Carsten Brzeski, global head of macro at ING bank, said about the ECB, whose key rate has hit a record-high 4%.
鈥淕iven that the full impact of the tightening so far will still unfold in the coming months, the risk is even high that the ECB has already tightened too much,鈥� he said in a research note.
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This story has been corrected to show that the eurozone economy shrank 0.1% in the third quarter, not grew by that amount.
Courtney Bonnell, The Associated Press
