European Union statistics office Eurostat estimated on Friday that
consumer prices in the 18 countries sharing the euro rose an annual
0.8 percent this month. That was the same rate as in January and
December, after readings of 0.9 percent in November and 0.7 percent
Economists polled by Reuters had forecast inflation would slow to
0.7 percent. Fears the bloc may be at risk of deflation as it
struggles to recover from its debt crisis have raised expectations
the ECB will use interest rates or other policy tools to give the
economy further support.
"The higher than expected inflation numbers reduce the chances of an
ECB rate cut at next week's meeting, and we maintain the view that
... the central bank will keep rates on hold," said Nick Kounis,
head of macro research at ABN AMRO.
ECB President Mario Draghi has warned of the risk of inflation
getting stuck in a danger zone below 1 percent, but said again on
Thursday that there was clearly no deflation.
"While the ECB does not see deflation as a serious threat in the
euro zone, it is worried about inflation staying below 1 percent for
a prolonged period, thereby destabilizing inflation expectations,"
IHS Global Insight economist Howard Archer said.
"Consequently, it still looks touch-and-go whether the ECB will take
any further stimulative action at its March 6 policy meeting. Much
will likely depend on whether the ECB staff's new forecasts show
euro zone consumer price inflation still below 2.0 percent in 2016."
The February inflation rate was stable because lower energy costs
were offset by more expensive industrial goods and services, the
Eurostat data showed.
"The outcome is rather odd as it does not
seem to be consistent with the falls in annual inflation we have
seen in Germany, Spain, Italy and Belgium," Kounis said.
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"The outcome may have been driven by a jump in inflation in France,
where the data are not yet released, but this would be difficult to
explain. We suspect that euro zone inflation will be revised down in
the final estimate."
Figures on Thursday showed annual inflation in Germany, the euro
zone's economic powerhouse, easing to its lowest level in 3-1/2
years in February at 1 percent.
But so-called core inflation in the euro zone, which excludes the
most volatile components like energy, food, alcohol and tobacco
prices, continued to inch higher, Friday's data showed. It rose to
1.0 percent year-on-year in February from 0.8 percent in January and
0.7 percent in December.
Price pressures in the euro zone are low because unemployment
remains stuck near record highs. Eurostat said on Friday that 12
percent of the bloc's workforce was unemployed in January, unchanged
from a month before.
In absolute terms, the number of people without jobs edged higher to
19,175,000 from 19,158,000 in December, it said.
(Editing by Catherine Evans)
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