Euro area inflation dipped in November to an annual 2.0pc from 2.2pc in October according to the European Statistics Agency, on the back of a slowdown in energy, food and core price rises.

Given falling oil prices, which have dropped 30pc since early October to around $50 a barrel, the headline rate of inflation looks set to fall further. That creates a dilemma for the European Central Bank which wants to stop its bond-buying programme in December and to start raising interest rates in autumn of next year.

The bank wants to see sustained inflation around 2pc that would indicate there is not a risk of the eurozone falling back into a recession.

Central banks across the globe spent decades fighting inflation, but the depth of the 2008 recession and the slow recovery from it has meant that subdued inflation has stayed with us.

Across the globe, they have consistently over-estimated the rate of inflation. In 2017, the US Federal Reserve was surprised by a sharp drop in the cost of mobile phone plans and was forced to push back its rate rises.

The concern is that with their focus on inflation central banks might raise rates too sharply, killing the nascent economic recovery. The ECB has already had to row back on a premature rate rise in 2011.

There was better news however for the ECB in unemployment numbers, which showed the euro area seasonally-adjusted unemployment rate was 8.1pc in October 2018, unchanged from September 2018 and down from 8.8pc in October 2017. Tighter labour markets should create higher wages, allowing the ECB to embark on rate rises, but for many economists, that path is still unclear. “We believe that the staff projections, now pencilling in 1.8pc and 1.7pc GDP growth for 2019 and 2020, respectively, will inevitably be revised down at the next forecast round in December,” ING chief economist Peter Vanden Houte wrote in a research report. “All of this means that the ‘normalisation’ of the ECB’s monetary policy is going to be a long and winding road,” he said.

Data from the Central Bank of Ireland showed that although mortgage lending grew 1.1pc in October to €47m, it still suggested that consumers were not confident enough in their economic outlook to borrow more heavily, despite a firming jobs market and the strongest economic growth rate in Europe.

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