Despite the drop over the month, the Eurozone’s annual rate of consumer price inflation rose slightly, up to 0.9 per cent in the year to last month. In the year to October, it was only 0.7 per cent.
However, the rate is well down from the same period one year earlier, when it ran at 2.2 per cent. It is also still some way short of the ECB target, which aims for prices to increase by nearly two per cent every 12 months.
“In the periphery, in particular, we think that there is a clear risk of a sustained period of deflation that could become entrenched. Even the core economies could experience a period of declining prices if oil and commodity prices were to drop sharply,” commented Capital Economics’ Ben May.
Only Greece is currently in outright deflation, with prices falling by 0.7 per cent in the year to November.
France has the lowest CPI rate of any major Eurozone economy, at only one per cent in the year to November, while Germany, Italy and Spain run slightly higher, with rates of 1.7, 1.4 and 1.8 per cent respectively.