17.01.201823:44:00UTC+00Eurozone Inflation Rate Drops in December

Inflation in the eurozone fell further from the European Central Bank's target in December from November, according to a revised data-set that confirms an initial reading. Cheaper phone calls, clothes and vegetables slowed consumer price growth in December as expected despite more expensive fuel and cigarettes.

Consumer prices increased at an annual pace of 1.4 percent in December, from 1.5 percent in November, according to a report from the European Union's statistics office Eurostat. That matched the “flash estimate” released at the beginning of January.

Excluding the more volatile food, alcohol and tobacco components, the year on year rate was steady in December at 0.9 percent, also confirming the previous reading.

Of all components, energy prices grew the most at 2.9 percent year-on-year in December, while unprocessed food gained 1.9 percent. Without these two volatile components, or what the ECB calls core inflation, prices increased by 1.1 percent year-on-year, the same as in November and in October.

The ECB aims to keep inflation below but close to 2 percent over the medium-term and has been buying government bonds on the secondary market to inject more cash into the banking system and so to stimulate credit to the economy.

ECB chief Mario Draghi has said that he expects inflation temporarily to pull back as a result of the fading in the impact of the rebound in energy prices. Since the economy and labour market are both picking up steam, however, Draghi has said he reckons inflation should start heading in the direction of the ECB's almost 2 percent target over time.