European stock markets continued with a negative sign in Friday’s trading after the Eurostat data that showed a new inflation record in December, led again by the unprecedented rally of energy prices.
In particular, inflation climbed to a new record at 5.0% in December from 4.9% in November and -0.3% in December 2020, according to the initial estimate of the European Statistical Office.
Eurostat expects energy to have the highest annual rate again in December (26.0% compared to 27.5% in November). Structural inflation excluding energy and food is estimated to have remained unchanged at 2.6%.
Although the European Central Bank recognizes the sharp rise in inflation in recent months, mainly due to the spike in energy prices, the central bank continues to expect that it will decline within the next year. At the last monetary policy meeting in mid-December, ECB President Christine Lagarde reiterated that, according to bank analysts, inflation will be below the 2% target over the forecast horizon.
The price rally, however, is expected to intensify pressure on the ECB to take action to curb inflation.
On the board, the pan-European Stoxx 600 index lost small 0.25% to 486.93 points after falling 1.25% on Thursday
The German DAX lost 0.35% to 15,997.57 points after data showed that exports rose sharply in November, while imports and industrial production fell.
In particular, exports increased by 1.7% on a seasonally adjusted basis, while imports fell 3.3%, according to the country’s statistical office. At the same time, industrial production fell by 0.2% after the jump in October by 2.4%.
The French CAC 40 recorded small losses of 0.06% at 7,244.99 points, while the British FTSE 100 recorded marginal changes at 7,450.87 points.
In the periphery, the Italian FTSE MIB gains 0.4%, while the Spanish IBEX 35 loses 0.5%.
For the rest of the day, retail sales exceeded expectations in November, indicating that consumer demand remained strong, despite new restrictions due to the pandemic.
In particular, retail sales rose 1% in November, according to Eurostat, shattering expectations of a 0.5% drop in a Reuters poll. On an annual basis, retail sales expanded by 7.8%, well above forecasts of 5.6%.
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