INFLATION has dipped modestly across the 19-country eurozone in December largely because of a moderation in the growth of energy price rises, figures show.

Eurostat, the EU’s statistics agency, said consumer prices were 1.4 per cent higher in the year to December, down from 1.5 per cent the month before.

The decline was expected in financial markets and means that inflation remains well below the European Central Bank’s (ECB) goal of just below two per cent.

Of perhaps more concern to policymakers at the ECB is the fact that the core rate, which strips out volatile items such as food and energy, remained even lower at 0.9 per cent. That suggests that the economic rebound in the eurozone has yet to materially affect wages.

A buoyant economy should help reduce unemployment, stoke wages and consumer prices. However, in the wake of a near-decade-long economic crisis, this economic transmission mechanism appears to have broken down for now, with workers still too wary to ask for big wage gains.

The lower core rate is a clear indication that wage rises remain subdued across the eurozone even though the recovery is going well and the ECB has slashed interest rates and pumped hundreds of billions of euros into the eurozone economy.