The Composite Purchasing Managers’ Index (PMI) for the eurozone increased to 52.2 in October from 52.0 in September, according to data by Markit Economics. This is the 16th consecutive month that the index has been above the 50 level that delineates growth from contraction. A poll conducted by Reuters had predicted a fall to 51.7.

The Composite PMI is a measure of private sector activity. But the underlying figures show that the increased activity was achieved through lower prices.

The surprise growth will provide some relief to policymakers, although the news that firms reduced prices once again will add to fears of deflation.

The survey also suggested that a further significant pickup is unlikely in the coming months, as new orders barely rose.

In the meantime, the minutes of the most recent Bank of England Monetary Policy Committee (MPC) meeting show that UK interest rates are unlikely to rise in the near future as the majority of members are concerned that a ‘premature’ rise could leave the economy vulnerable to shocks.

Policymakers are also worried about the slowdown in the eurozone and a looming deflationary scenario.

The MPC agreed this month to leave the BOE’s benchmark interest rate at a low of 0.5 per cent and the total size of its bond-buying stimulus programme unchanged at £375 billion. UK annual inflation declined to 1.2 per cent in September, well below the BOE’s target of two per cent.

Finally, consumer prices in the US rose marginally in September, with the consumer price index (CPI) rising a seasonally-adjusted 0.1 per cent from a month earlier, the Labour Department said last week. This is the latest sign of modest US inflation and somewhat alleviates worries of global deflation. Economists surveyed by Bloomberg had forecast no change in consumer prices.

Compared to September of last year, consumer prices were up 1.7 per cent, matching last month’s annual reading.

The CPI is the most widely used measure of inflation and is sometimes viewed as an indicator of the effectiveness of government economic policy.

This article was compiled by Bank of Valletta for general information purposes only.

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