Euro zone inflation rose by less than expected in November, highlighting that price growth remains weak in the bloc and supporting the ECB's plan to remove stimulus only gradually. As Sonia legg reports, the data comes a day after three central banks issued warnings about a bubble they helped create.
Many had expected the cost of those Christmas extras to be heading higher. The inflation figures from Eurostat were certainly eagerly awaited. (SOUNDBITE) (English) JAMES BEVAN, CHIEF INVESTMENT OFFICER, CCLA, SAYING: "I will be looking very closely at the euro zone inflation data because it seems that the growth numbers across Europe are now inconsistent with the extraordinarily loose policy of the European Central Bank." But the November survey showed price growth at only 1.5 percent. That's an increase on the month of just point one and still below the ECB's 2 percent target. Euro zone unemployment has fallen though - 8.8 per cent is the lowest level since 2009. The surveys came a day after three central banks - including the ECB - raised warning signals about the bubble risks they've created. (SOUNDBITE) (English) JAMES BEVAN, CHIEF INVESTMENT OFFICER, CCLA, SAYING: "I certainly think that there is a real risk of bubbles emerging in an environment of very low negative interest rates because the fundamental driver of risk adjusted returns being a risk free rate that is positive is simply not in place." Many economists predict the central bank will shut the door on easy money by the end of 2018. Assuming political risks don't grow. (SOUNDBITE) (English) JAMES BEVAN, CHIEF INVESTMENT OFFICER, CCLA, SAYING: "I certainly regard the German political situation as a risk factor in terms of the European markets. However I am much comforted by Monsieur Macron in France. He is generating real leadership traction and I suspect that a co-ordinated approach to the challenges of Europe will be driven much more by France than Germany." Spain's brushing aside its recent political troubles too. Fourth quarter growth was unchanged - despite an exodus of companies from Catalonia and a slump in retail sales The government is sticking to a forecast for year-on-year growth of 3.1 percent.