Eurozone Inflation At 3-Month Low, Jobless Rate Steady

Eurozone's consumer price growth eased to its lowest level in three months in November and the core figure unexpectedly eased, amid slower growth in food and energy inflation, preliminary figures from Eurostat showed on Friday. Separately, Eurostat reported that Eurozone's unemployment rate remained unchanged at its lowest level in nearly 10 years for a third straight month in October. The consumer price index rose 2 percent year-on-year following a 2.2 percent increase in October, which was the highest since December 2012. The slowing was in line with economists' expectations. Core inflation, which excludes energy, food, alcohol & tobacco, dropped to 1 percent from 1.1 percent in October. Economists had expected the rate to remain unchanged. In August and September, core inflation was 0.9 percent each. In November, energy inflation slowed to 9.1 percent from 10.7 percent, yet emerged the highest rate among the CPI components. Food, alcohol & tobacco prices rose 2 percent after a 2.2 percent increase in October.

The Eurostat is set to release the full data on December 17. The seasonally adjusted jobless rate was 3.1 percent in October, where it has been since July. Economists had expected the figure to ease slightly to 8 percent. A year ago, the unemployment rate was 8.8 percent.

The jobless rate is the lowest recorded in the euro area since November 2008.

"With downside risks likely to remain a key factor for the Eurozone and already some moderation in the labor market, it could be that the expected core inflation improvements are delayed further, which would make the [ECB's] forward guidance harder to maintain," ING Bank economist Bert Colijn said.

Earlier this week, the European Central Bank President Mario Draghi expressed confidence that core inflation will gradually rise in the coming months, thanks to higher wage growth and a recovery in producer and import prices. The Governing Council continue to anticipate that the net asset purchases will come to an end in December, Draghi said. The bank has repeatedly signaled that the end of asset purchases does not mean interest rates will be hiked soon, and clarified that rates will be raised only when inflation hits its target of "below, but close to 2 percent".

Economists widely expect the bank to hike interest rate in the second half of next year.