Energy bolsters eurozone prices

Energy prices helped keep euro zone annual inflation at 3 percent in November, data showed on Thursday, but prices for other goods were unchanged on the month, suggesting the European Central Bank could cut interest rates again. Consumer price inflation was confirmed at the 3 percent level for the third consecutive month, the European Union's Statistics Office Eurostat said, in line with expectations.
But stripping out energy, food, alcohol and tobacco, consumer prices fell 0.1 percent in the month - another sign of the 17-nation euro zone's weakening economy. "Inflation has peaked," said Raphael Brun-Aguerre, an economist at J.P. Morgan. "This number in November is probably the highest of this cycle. It should give the ECB more space to manoeuvre," he said.
Energy prices were by far the biggest influence on the euro zone index, rising 0.7 percent in November on a monthly basis. In the eurozone, fuels for transport and heating oil were the largest contributors to inflation on an annual basis, adding 0.48 percentage points and 0.22 percentage points respectively.
Eurozone GDP grew just 0.2 percent in the third quarter and economists expect it to contract in the fourth and also in the first three months of next year, likely sending the bloc back into recession after its two-year recovery from the worst global financial crisis since the 1930s.
In that tough environment, Eurostat said on Thursday that employment fell 0.1 percent in the euro zone in the third quarter. The largest job cuts came in real estate and construction, as the bloc tries to recover from the bursting of a massive housing bubble that helped fuel the 2008/2009 global financial crisis and the ensuing European debt debacle.
The jobless rate in the euro zone rose to 10.3 percent in October, its highest level since the creation of the euro, although there is huge divergence between the 17 countries in the single currency area. German unemployment continues to fall, while the number of jobless in Spain is above 20 percent.