French and German inflation rose in December compared to November, according to data released on Thursday. The increase in energy prices has accelerated the most.
According to the French statistical institute INSEE, in December prices increased by 4.1% compared to a year ago, while in November the same indicator was 3.9%. Analysts polled by Reuters had forecast a 4.1% price increase.
While the increase in food prices slowed from 7.7% to 7.1% in December compared to November, energy prices increased from 3.1% to 5.6%.
Inflation also increased in Germany in December. According to Destatis, Germany’s federal statistics office, prices in December increased by 3.7% compared to the previous year, compared to 3.2% in November. Analysts polled by Reuters had forecast a slightly higher price rise of 3.8% in December.
In December the increase in food prices slowed from 5.5% to 4.5% compared to November. While energy prices fell by 4.5% in November compared to the same period last year, energy prices already increased by 4.1% in December.
French and German government bond yields rose after the release of inflation data. Rising inflation has dampened investors’ hopes that the European Central Bank (ECB) will cut interest rates in the near future. High government bond yields are associated with the expectation of high interest rates.
“The fact that the yield has increased today could be precisely due to this [Saksa] inflation numbers have risen,” analyst Michael Weidner told Reuters.
“The wishful thinking that inflation is over and will never come back has never been true, and people are only now coming to terms with that,” he added.
Eurostat will publish inflation data for eurozone countries on Friday.
2024-01-04 15:47:00
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