Inflation in the euro area up
During August, euro area inflation accelerated for the first time in 11 months, underpinned by higher crude oil prices, thus threatening to worsen the region’s economic woes. Consumer prices in the 17-nation currency bloc increased 2.6 per cent from...
During August, euro area inflation accelerated for the first time in 11 months, underpinned by higher crude oil prices, thus threatening to worsen the region’s economic woes.
Consumer prices in the 17-nation currency bloc increased 2.6 per cent from the same month last year, according to data published by the EU’s statistics office. This is in line with an initial estimate published earlier.
Compared to the previous month, consumer prices rose by 0.4 per cent. Core inflation, that is, excluding energy costs, slowed to 1.5 per cent from 1.7 per cent.
In recent days, crude oil prices rose to the highest levels in four months, pushing up costs for companies and the public in general.
Meanwhile a separate report showed that employment in the EU was unchanged in the second quarter after a 0.3 per cent drop in the previous three months.
Meanwhile, German investor confidence in September rose to -18.2 from -25.5 in August, possibly reflecting a positive reaction to last week’s announcement by European Central Bank of the new bond-buying programme. Economists polled by a Bloomberg News survey had forecast a gain to -20.
The investor confidence index, which is published by the ZEW Centre for European Economic Research, is an index of investor and analyst expectations and aims to predict economic developments six months in advance.
Finally, UK consumer prices rose less than expected in August. The Office of National Statistics reported that during the month consumer prices rose 2.5 per cent from the same month in 2011. This compares with 2.6 per cent in July.
According to a Bloomberg News survey, economists were expecting an advance of the same magnitude. From the previous month, prices rose by 0.5 per cent.
The weak economy is limiting corporate pricing power which may cause inflation to fall back to two per cent by the end of the year, in line with the Bank of England’s forecast.
If the trend holds, the bank might have scope for a fresh round of stimulus later this year.
This report was compiled by Bank of Valletta plc for general information purposes only.