Annual inflation in the euro zone cooled to 2.4% in November from 2.9% in October, flash figures showed Thursday.

Economists polled by Reuters expected a reading of 2.7%.

Core inflation — a measure closely-watched by the European Central Bank that excludes the volatile effects of energy, food, alcohol and tobacco — also came in lower than expected, dropping to 3.6% from 4.2% in October.

Energy prices continued to log significant year-on-year declines, coming in at -11.5% in November. Food, alcohol and tobacco contributed with the biggest pull higher, at 6.9%.

Headline inflation has now cooled significantly from the peak levels of 10.6% in October 2022. Inflation in the euro zone’s largest economies, Germany and France, has dropped to 2.3% and 3.8%, respectively.

ECB officials have repeatedly stressed that it is too early to declare victory over price rises in the 20-member euro zone bloc, as they monitor potential pressures from wage increases and energy markets.

Mathieu Savary, chief European strategist at BCA Research, said that traders would now be tempted to bring forward expectations for the timeline of the first ECB rate cut, but argued that the central bank’s concerns over labor market tightness continued to imply “later rather than sooner rate cuts.”

Separate data released by statistics agency Eurostat on Thursday showed that unemployment in the euro area remained at a record low of 6.5% in October, despite a contraction in the euro zone economy in the third quarter.

“For the ECB, signs of an imminent victory on inflation are mounting,” Bert Colijn, senior euro zone economist at ING, said in a note, adding that some of the impact from existing monetary tightening was yet to be felt.

“The market is therefore right to start looking at rate cuts for 2024. We think the first one could well happen before the summer.”