|
 Eurostat said consumer prices in the euro zone rose by 0.4 percent
in October, in line with market expectations, the day after
inflation in Germany, Europe's largest economy, slowed in October to
0.7 percent, its lowest reading since May.
The euro <=EUR> initially strengthened against the dollar and the
pound following the release of the data but quickly gave up these
gains and remained below the levels seen at the start of the trading
session.
"There was some speculation leading up to the release that inflation
might have been stable, mainly because of the German inflation
numbers yesterday, but it rose nevertheless," Nick Kounis, head of
macro research at ABN AMRO, said.
The European statistics office said prices rose fastest for
services, 1.2 percent, followed by the 0.5 percent increase for
food, alcohol and tobacco.
Unprocessed food prices fell 0.1 percent year-on-year in October
while energy was 1.8 percent cheaper, a slowdown in the rate of
decline from September when prices for these goods dropped 0.9 and
2.3 percent respectively.
Excluding unprocessed food and energy, prices rose 0.8 percent in
October, a stable rate from September. This number is referred to as
core inflation by the European Central Bank.
The ECB, which has a mandate to keep inflation below but close to 2
percent, has committed to an expansionary policy, including an
asset-buying plan, and said it was considering further measures if
needed.
[to top of second column] |
The better-than-forecast economic sentiment figures out on Thursday,
which also hinted at higher inflation expectations by consumers and
producers alike, may give the central bank an incentive for holding
off with further policy action before the end of the year.
"Looking forward, we think that inflation is likely to remain at
very low levels in the coming months. It could be that over the next
six months inflation is half a percent or below. Even though it
might rise later in 2015 it is likely to remain far, far below the
ECB's price stability goal," Kounis said.
Eurostat data also showed on Friday that unemployment in the euro
zone remained unchanged at 11.5 percent in September.
(additional reporting by Philip Blenkinsop; editing by Adrian Croft)
[© 2014 Thomson Reuters. All rights
reserved.] Copyright 2014 Reuters. All rights reserved. This material may not be published,
broadcast, rewritten or redistributed.
 |
