Ireland continues to lead the euro zone with the highest annual harmonised index of consumer prices (HICP) in December at 4.6 per cent according to official EU figures released today.
This is a decrease of 1.4 per cent on November and lends weight to the belief that inflation is now falling.
Overall euro zone inflation was measured at 2.6 per cent in December down from 2.9 per cent in November, leaving the average rate for 2000 as a whole at 2.3 per cent, the EU's statistics office, Eurostat, said.
The decline will add to expectations that falling inflation in the coming months will give the European Central Bank room to counter a slight growth slowdown with an interest rate cut.
The closely watched core rate, which excludes volatile energy and food prices, was unchanged for the third month in a row at 1.5 per cent. However, excluding energy prices alone, inflation ticked up to 1.7 per cent in December from 1.6 per cent in November.
On an annual basis, food, alcohol and tobacco prices rose 2.4 per cent in December compared with 2.2 per cent in November. Energy prices rose 11.3 per cent compared with 15.2 per cent in November. Housing and associated services rose, such as water and gas, rose 5.3 per cent compared with 5.9 per cent in the prior month. Transport costs rose 3.8 per cent, down from 5.3 per cent.
Inflation declined in nine euro zone member states plus Greece, which will be included in data from January, when it officially became the 12th member of the currency bloc.
Greece's inflation rate in December was 3.7 per cent, meaning the country is likely to have a slight upward impact on the EMU average when included for the first time in January data due to be published on February 28.
In the Netherlands, inflation in December was unchanged at 2.9 per cent year-on-year, while in Portugal it rose to 3.8 per cent from 3.6 per cent in November. Inflation was highest in Ireland at 4.6 per cent and lowest in France at 1.7 per cent.
Additional reporting by Reuters
