Euro zone inflation, December 2024

Annual inflation in the euro zone rose for a third consecutive month to reach 2.4% in December, statistics agency Eurostat said on Tuesday.

The reading was in line with the forecast of economists polled by Reuters and marked an increase from a revised reading of 2.2% in November. Core inflation held at 2.7% for a fourth consecutive month, which also met economists’ expectations, while services inflation rose to 4% from 3.9%.

Headline inflation was widely expected to accelerate after hitting a low of 1.7% in September, as the base effects of lower energy prices fade. The full extent of the increase in reading – along with persistence in services and core inflation – will be closely watched by the European Central Bank, which markets currently expect to cut interest rates from 3% to 2% in several trims this year.

The rate of price increases in the euro zone’s largest economy, Germany, hitting 2.9% higher than expected in December, according to figures published separately this week. Meanwhile, inflation in France came in at 1.8% last month, below a Reuters analyst poll that predicted a 1.9% print.

Haig Bathgate, director of Callanish Capital, told CNBC’s “Squawk Box Europe” that ECB policymakers would not be overly concerned by a warmer monthly inflation reading, as long as it was broadly in line with expectations.

“There is now a lot more predictability in a lot of the data series that we’re seeing … the direction of travel of rates. [lower] in Europe it’s much more predictable than say, the UK,” Bathgate said on Tuesday.

This is a breaking news story and will be updated shortly.