Eurozone consumer inflation rises to over 3-year high in December, beats market expectations

Consumer inflation in the eurozone rose to over 3-year high during the month of December, slightly beating what markets had initially anticipated.

Eurozone’s annual inflation rate hit 1.1 percent in December, a sharp jump from November's rate of 0.6 percent, data released by official statistics agency Eurostat showed Wednesday. The rate is the highest since September 2013, when inflation was also 1.1 percent.

The higher-than-expected increase brings inflation closer to the European Central Bank's target of just below 2 percent. ECB chief Mario Draghi has said he expects inflation to reach the target by 2018 or 2019.

Last month's increase was driven mainly by a jump in energy prices, which rose by 2.5 percent year-on-year in December, their first increase in over a year. Energy prices were boosted by oil cartel OPEC's decision to cut output.

Further, food, alcohol and tobacco prices rose 1.2 percent year-on-year, while services were also 1.2 percent costlier than a year ago.

" The concern is that domestic demand is likely to remain subdued over the course of 2017 as political uncertainty dominates, resulting in another year of disappointing growth across the region as a whole," WSJ reported, citing Chris Williamson, Chief Business Economist, IHS, Markit.