Inflation eases to 2.2% in euro zone

Euro-zone inflation eased slightly in November, falling to 2.2 per cent from 2.3 per cent.

The decline, the first downward movement since July, can be expected to continue over coming months, according to EU officials and analysts.

The shift in direction is likely to be welcomed by the European Central Bank, which has long maintained an inflation target of 2 per cent.

Figures released by the EU's statistical agency, Eurostat, show that the Republic's inflation rate remains the highest across the 12-member area.

Inflation in the Republic jumped from 4.4 per cent in October to 4.7 per cent last month.

The next most significant price increases were recorded in Portugal, where inflation was running at 4.1 per cent in November.

The lowest rate was observed in Germany, which has seen annual inflation drop from 1.3 per cent to 1 per cent over the month.

A breakdown of the November data shows that core consumer prices, which exclude volatile energy and unprocessed food costs, rose by 2.3 per cent on a year-on-year basis.

"The figures confirmed our flat estimate for this month of 2.2 per cent," the European Commission's Economic and Monetary Affairs spokesman, Mr Gerassimos Thomas. told a news conference.

"These are in line with comments we have made so far on the inflation outlook.

"We are looking for core inflation to start coming down next year," he added.

Economists agreed that inflation in the euro zone should slow still further in coming months.

"We could reasonably expect that in the first few months of 2003...we have a drop below two per cent," said Mr Jean-François Mercier, Salomon Smith Barney European economist.

"I would say that this justifies the ECB approach that the outlook for inflation has improved," he added. - (Additional reporting Reuters)