Euro zone inflation slowed as expected in December because of slower growth in the price of energy and unprocessed food, but the core inflation measure, which excludes these volatile components, held steady, data showed on Friday.

The European Union's statistics office Eurostat estimated that consumer prices in the 19 countries sharing the euro rose 1.4% year-on-year last month, slowing from a 1.5% increase in November, as expected by economists.

This was mainly because energy prices grew 3.0% year-on-year in December, rather than 4.7% as in November and unprocessed food was 1.9% more expensive, rather than 2.4% as in November.

Without these two components, or what the European Central Bank calls core inflation, prices grew 1.1% year-on-year in December, the same as in November and October.

The ECB wants to keep headline inflation below, but close to two percent over the medium term and has been buying euro zone bonds on the secondary market to inject more cash in to the banking system and in this way boost credit to the economy.

From the start of this year, the bank halved its monthly bond purchases to 30 billion euros as the euro zone economy is powering ahead and unemployment is at its lowest in nine years, reducing the need for aggressive stimulus. (Reuters)

Source: www.businessworld.ie