Despite signs that core inflation in Germany picked up in November, euro-zone core inflation remained unchanged at 0.9%. This suggests that despite strong economic growth, underlying inflationary pressures in the rest of the euro-zone actually softened last month. The absence of price pressures outside of Germany is best explained by the large degree of labour market slack in those economies, which is holding down wages. Indeed, the most recent data show that in Q2 annual hourly labour cost growth was just 0.4% in Spain, 0.9% in Italy and 1.4% in France. By contrast, it was 2.3% in Germany.
Become a client to read more
This is premium content that requires an active Capital Economics subscription to view.
Already have an account?
You may already have access to this premium content as part of a paid subscription.
Sign in to read the content in full or get details of how you can access it
Register for free
Sign up for a free account to:
- Unlock additional content
- Register for Capital Economics events
- Receive email updates and economist-curated newsletters
- Request a free trial of our services