Inflation in the 20 countries that use the euro currency rose in November – but that likely won’t stop the European Central Bank from cutting interest rates as the prospect of new U.S. tariffs from the incoming Trump administration adds to the gloom over weak growth.

The European Union’s harmonized index of consumer prices stood up 2.3 per cent in the year to November, up from 2.0 per cent in October, the EU statistics agency Eurostat reported Friday.

Energy prices fell 1.9 per cent from a year ago, but that was offset by price increases of 3.9 per cent in the services sector, a broad category including haircuts, medical treatment, hotels and restaurants, and sports and entertainment.

Inflation has come down a long way from the peak of 10.6 per cent in October 2022 as the ECB quickly raised rates to cool off price rises. It then started cutting them in June as worries about growth came into sharper focus.

High central bank benchmark rates combat inflation by influencing borrowing costs throughout the economy. Higher rates make buying things on credit – whether a car, a house or a new factory – more expensive and thus reduce demand for goods and take pressure off prices. However, higher rates can also dampen growth.

Growth worries got new emphasis after surveys of purchasing managers compiled by S&P Global showed the eurozone economy was contracting in October. On top of that come concerns about how U.S. trade policy under incoming President Donald Trump, including possible new tariffs, or import taxes on imported goods, might affect Europe’s export-dependent economy. Trump takes office Jan. 20.

The eurozone’s economic output is expected to grow 0.8 per cent for all of this year and 1.3 per cent next year, according to the European Commission’s most recent forecast.

All that has meant the discussion about the Dec. 12 ECB meeting has focused not on whether the Frankfurt-based bank’s rate council will cut rates, but by how much. Market discussion has included the possibility of a larger than usual half-point cut in the benchmark rate, currently 3.25 per cent.

Inflation in Germany, the eurozone’s largest economy, held steady at 2.4 per cent. That “will strengthen opposition against a 50 basis point cut,” said Carsten Brzeski, global chief of macro at ING bank, using financial jargon for a half-percentage-point cut.

The ECB sets interest rate policy for the European Union member countries that have joined the euro currency.