The harmonized rate of inflation fell to 12.3% in December from 12.5% in November. The December reading marked the lowest rate of inflation since September. The moderation was broad-based, with lower price pressures recorded for food and non-alcoholic beverages, transportation, and housing and utilities.
The trend has pointed upward, with Harmonized Average Annual Inflation coming in at 8.7% in December (November: 8.0%). Meanwhile, consumer price inflation fell to 11.6% in December from 11.8% in the previous month.
Finally, harmonized consumer prices increased by 0.28% in December compared to the previous month, moderating from November’s rise of 0.63%. The December result was the weakest reading since July.
Commenting on the outlook, Paolo Pezzoli, chief economist at ING, said:
Signs from the business sector are of a moderation in intentions to raise prices among manufacturers but not yet in services, suggesting that some form of reopening consumption is still working. During the first half of the year, we expect the decline in energy inflation to outweigh the inertia in the core inflation component. This should lead to a gradual decline in the main index, which is expected to end the year above 2.5% yoy.”
FocusEconomics panelists see harmonized inflation at 6.0% in 2023, up 0.5 percentage points from the previous month’s estimate, and 2.1% in 2024.