The annual change in consumer prices was just under two percent in December, with alcohol and tobacco becoming more expensive

by EU rules calculated inflation, i.e. the annual change of the harmonized consumer price index (YKHI) was 1.7 percent in December. The reading was the same as November’s detailed annual change, he says Statistics Finland.

The biggest increase was recorded in the prices of alcohol and tobacco, which rose by 5.6 percent.

Food and non-alcoholic beverages rose in price at a rate of 1.2 percent. In transport, prices fell slightly, by 0.2 percent.

The monthly change in December was 0.2 percent. The harmonized consumer price index differs in some respects from Statistics Finland’s own inflation reading. Interest on mortgages or consumer loans, for example, is not included in the euro area’s common inflation measure.

Size however, inflation in the euro area was faster than in Finland and accelerated compared to November. December’s reading was 2.4 percent, he said Eurostat. It was the third month in a row that inflation in the euro area accelerated.

The goal of the European Central Bank, the ECB, is for inflation to settle at around two percent in the medium term. The next interest rate cut from the ECB is expected at the meeting on January 30.

OP’s senior market economist Jari Hännikäinen estimates that the acceleration of the pace does not endanger the continuation of the ECB’s interest rate cuts. Faster inflation was expected and it is expected to remain temporary, although fluctuations in the price of natural gas, for example, may change the picture.

“The gradually easing price and wage pressures and the dull economic picture of the euro area speak in favor of interest rate cuts. At its December meeting, the ECB made it quite clear that the central bank will continue to advocate moderate interest rate changes, and we therefore predict that the rate cut cycle will continue in steps of 0.25 percentage points,” Hännikäinen said in the release.

In the OP, it is expected that the ECB will lower its deposit rate by 0.25 percentage points in January, March, April and June, so that the deposit rate will settle at 2.0 percent in June.