European inflation held steady in November, suggesting cooling economic growth is making it more difficult for companies to pass on higher energy costs.
Euro-area consumer prices rose 1.9 percent from a year earlier, the European Union statistics office in Luxembourg said today. That matched an initial estimate published on Nov. 30 and is the fastest pace since November 2008. Labor costs rose 0.8 percent in the third quarter from a year earlier, after gaining 1.6 percent in the second quarter, separate data showed.
Crude-oil prices have jumped 14 percent over the past five months, denting households’ purchasing power just as governments from Spain to Italy are toughening austerity measures. Euro-area growth weakened in the third quarter and unemployment rose to the highest in 12 years in October, reducing companies’ leeway to push through price increases.
“The inflation picture in the euro zone remains well under control,” said Marco Valli, chief euro-region economist at UniCredit SpA in Milan, when forecasting inflation to average 1.9 percent in 2011. “In the first part of the forecast horizon, upside risks are mostly related to energy” prices.
Consumer prices rose 0.1 percent from October. Core inflation, which excludes volatile costs such as energy prices, was unchanged at an annual rate of 1.1 percent, today’s report showed.
The European Central Bank, which aims to keep annual gains in consumer prices just below 2 percent, on Dec. 2 forecast inflation will average about 1.8 percent next year and 1.5 percent in 2012. Economic growth may weaken to 1.4 percent from 1.6 percent this year, the Frankfurt-based central bank forecast.
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