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Eurozone inflation tumbles to 2.4%; RMT members accept pay deal – business live


Eurozone inflation falls to 2.4%

Newsflash: Inflation across the eurozone has fallen sharply this month, as falling energy prices ease the cost of living crisis.

The eurozone annual inflation rate is estimated to be 2.4% in November, down from 2.9% in October.

That’s a bigger drop than expected, as economists had forecast the inflation rate would drop to 2.7%.

Statistics body Eurostat reports that food, alcohol & tobacco is expected to have the highest annual rate in November, at 6.9% (compared with 7.4% in October).

Service inflation is estimated to have eased to 4.0%, down from 4.6% in October.

Industrial goods price inflation has eased to 2.9%, from 3.5%, Eurostat estimates.

Energy prices continue to tumble on a year-on-year basis, down -11.5% compared with November 2022, compared with -11.2% in October.

In contrast, the UK’s inflation rate fell to 4.6% in October (we don’t have November’s figures yet), while US inflation cooled to 3.2% in October (ditto).

Key events

FT: Saudi wins provisional backing for Opec+ oil production cuts

Back in the energy sector, the Financial Times is reporting that Saudi Arabia has won provisional backing for further oil production cuts by the Opec+ group.

Under this provisional plan, to be discussed at today’s meeting, other members of the cartel would also contribute.

The FT says:

People familiar with Saudi Arabia’s thinking have said an additional group-wide production cut of about 1mn barrels a day — about 1 per cent of global supply — has gained support, though the number has not been finalised and could be higher or lower.

The kingdom would also extend its existing temporary voluntary curbs — also of 1mn b/d — that are due to expire at the end of this year, while Russia has also made smaller voluntary cuts to exports.

This chimes with Reuters’ report that there is preliminary agreement about an Opec+ output cut.

More here.

The UK’s transport secretary, Mark Harper, has welcomed today’s vote by RMT members to accept a pay offer.

Harper says it is “a significant step” towards resolving industrial disputes on the railway, and can lead to “long overdue reforms”.

Pleased to see that RMT members have overwhelmingly voted to accept the pay offer that the Rail Minister @HuwMerriman and I facilitated.

This is welcome news for passengers and secures workers a pay rise in the run up to Christmas. pic.twitter.com/7oxUy8vAwq

— Mark Harper (@Mark_J_Harper) November 30, 2023

With the RMT now withdrawing their strike mandate, today marks a significant step towards resolving industrial disputes on the railway and means a pathway to delivering long overdue reforms.

— Mark Harper (@Mark_J_Harper) November 30, 2023

Meanwhile, the leaders of ASLEF, the train drivers’ union, continue to block their members from voting on an offer taking train drivers’ median salaries from £60,000 to £65,000 for a 35-hour, 4-day week.

ASLEF are now the only rail union who are striking.

— Mark Harper (@Mark_J_Harper) November 30, 2023

If ASLEF cared about their members & passengers, they’d follow the RMT’s lead & give their members a say on that offer. But they don’t.

ASLEF continue to fund Sir Keir Starmer’s Labour, who take ASLEF’s cash & refuse to condemn their disruptive strikes.https://t.co/Ld1p5B99xe

— Mark Harper (@Mark_J_Harper) November 30, 2023

Full story: RMT union members at train operators vote to accept pay deal

Members of the RMT union working for train operators have voted to accept a pay deal, marking an end in part to the long-running national rail dispute, our transport correspondent Gwyn Topham writes.

The union announced an overwhelming vote in favour in an electronic ballot of a 5% pay deal for 2022, allowing talks to continue on a further deal for 2023 and 2024 without the threat of strikes or layoffs.

The train drivers union Aslef remains in dispute and a week of action including an overtime ban and rolling strikes begins on Friday.

The pay proposal which the RMT have accepted is online here.

In it, the Rail Delivery Group (made up of Network Rail and train operators) explain that the RMT’s strike mandate would end if members accepted it (as they have done so).

That would mean staff and passengers would have “respite from industrial action over Christmas and into the new year”, the RDG explained.

RMT members accept deal to end dispute over pay and conditions

Newsflash: Members of the RMT union have voted overwhelmingly to accept a deal to end their long-running dispute over pay and conditions which has let to months of disruption on the UK railways.

The offer was made by the UK’s Rail Delivery Group, and included a 5% pay increase for 2022, and a guarantee of no compulsory redundancies until December 2024.

RMT general secretary Mick Lynch says:

“Our members have spoken in huge numbers to accept this unconditional pay offer and no compulsory redundancies until the end of 2024.

“I want to congratulate them on their steadfastness in this long industrial campaign.

“We will be negotiating further with the train operators over reforms they want to see. And we will never shy away from vigorously defending our members terms and conditions, now or in the future.

“This campaign shows that sustained strike action and unity gets results and our members should be proud of the role they have played in securing this deal.”

Reuters: Opec+ has preliminary agreement for extra output cut

Reuters is reporting that the Opec+ group has reached a preliminary agreement for an additional oil output cut of more than 1 million barrels per day.

That’s being attributed to an Opec+ source, ahead of the formal Opec+ meetings due to take place later today (see intro for more details).

Here’s Marc de Muizon, senior economist at Deutsche Bank Research, on today’s eurozone inflation report:

“For the third month in a row, Euro Area inflation surprised markets and forecasters strongly on the downside today.

The November inflation flash prints confirmed price pressures are coming down quickly across all components of the inflation basket.

This print confirms that Euro Area domestic inflation is slowing much faster than anticipated by ECB forecasts a few months ago.”

Core inflation also falls in eurozone

Core inflation across the eurozone has also fallen this month.

If you strip out energy, food, alcohol and tobacco, annual core inflation dropped to 3.6% this month, down from 4.2% in October.

Core inflation is seen as a good guide to underlying inflationary pressures.

Diego Iscaro, head of European economics at S&P Global Market Intelligence, says inflation is likely to be below ECB forecasts in 2024:

“The larger than expected fall in eurozone inflation is good news and confirm the disinflationary trend already evident in recent months. The combination of falling inflation and still robust employment growth will help to support the economy and offset some of the drag coming from tighter monetary policy.

While we expect headline inflation to rise in December, the latest figures suggest that inflation in 2024 is likely to be below the ECB’s latest projections. It remains to be seen whether this will be enough to lead the central bank to cut interest rates already at the start of the second quarter of next year as financial markets currently expect. We expect that ECB will want to see a clear deceleration in wage growth before pulling the trigger”, said

Economics lecturer Daniel McLaughlin says inflation is likely to be rather lower than the ECB expected in the final quarter of this year.

The @ecb expected euro inflation to average 3.3% in Q4 but that now looks far too high, given 2.9% in Oct and Nov flash of 2.4%. Latter reflected 0.5% fall in prices on the month despite jump in food , with big fall (0.9%) in services. Core rate down to 3.6% (from 4.2%).

— Daniel McLaughlin (@drdanmclaughlin) November 30, 2023

ING: Falling inflation means eurozone rate cuts before the summer

Bert Colijn, senior eurozone economist at ING, predicts falling inflation will prompt the European Central Bank to start to cut interest rates before next summer.

Colijn says:

For the ECB, signs of an imminent victory on inflation are mounting. The central bank worries about factors like wage growth and possible spikes in the energy market that could put inflation on a higher path again.

But current monetary policy is sufficiently restrictive as bank lending data out earlier this week showed that the effects of higher rates are impacting lending significantly.

Also, there is still a lot more of the impact of tightening to come as interest payments are still increasing. The market is therefore right to start looking at rate cuts for 2024. We think the first one could well happen before the summer.

The sharp drop in eurozone inflation this month is a challenge to the European Central Bank’s argument that inflationary pressures are stubborn.

On Monday, ECB president Christine Lagarde told EU lawmakers that “This is not the time to start declaring victory.”

The ECB left interest rates on hold last month, after 10 increases in a row.

Mathieu Savary, chief European strategist at BCA Research, says the ECB is unlikely to start cutting interest rates soon:

“The Eurozone’s core CPI is falling even faster than market participants expected.

Traders will be tempted to bring their expectations of the first rate cut forward, but this would be a mistake. The ECB is too concerned by the tightness of the labor market, which implies later rather than sooner rate cuts.”

Eurozone inflation falls to 2.4%

Newsflash: Inflation across the eurozone has fallen sharply this month, as falling energy prices ease the cost of living crisis.

The eurozone annual inflation rate is estimated to be 2.4% in November, down from 2.9% in October.

That’s a bigger drop than expected, as economists had forecast the inflation rate would drop to 2.7%.

Statistics body Eurostat reports that food, alcohol & tobacco is expected to have the highest annual rate in November, at 6.9% (compared with 7.4% in October).

Service inflation is estimated to have eased to 4.0%, down from 4.6% in October.

Industrial goods price inflation has eased to 2.9%, from 3.5%, Eurostat estimates.

Energy prices continue to tumble on a year-on-year basis, down -11.5% compared with November 2022, compared with -11.2% in October.

In contrast, the UK’s inflation rate fell to 4.6% in October (we don’t have November’s figures yet), while US inflation cooled to 3.2% in October (ditto).





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