Home > Economy > Euro zone inflation rises more than forecast before ECB meeting

Euro zone inflation rises more than forecast before ECB meeting

Written by Business World, on 31st Aug 2017. Posted in Economy

article headline

Euro zone inflation rose more than expected in August, official data showed on Thursday, just as the European Central Bank prepares to debate whether to tighten policy after 2 and a half years of unprecedented stimulus.

Inflation in the 19-country currency bloc, targeted by the ECB at just below 2%, accelerated to 1.5 % in August from 1.3%, coming just ahead of expectations for 1.4% on the back of higher energy costs, Eurostat said on Thursday.

Underlying inflation, or prices excluding volatile food and energy costs, a figure closely watched by ECB policymakers, held steady at 1.3%, beating forecasts for 1.2%.

While the figures may strengthen the case of conservative policymakers, who are pushing for the ECB to wind down its asset-buying next year, the ECB is also now dealing with a strengthening euro, which pushes down prices.

Launched 2 and a half years ago, when the threat of deflation appeared real and imminent, the ECB's €2.3 trillion bond purchase scheme is due to expire at the end of the year, and policymakers promised to decide this "autumn" whether to extend the purchases or wind them down.

The eurozone economy is now growing for the 17th straight quarter, but wage growth is still paltry and sizable slack in the labor market suggests that wage inflation, a vital ingredient for overall inflation, may be sometime away, an argument for some policymakers to continue with stimulus.

Indeed, unemployment held steady at 9.1% in July, Eurostat said separately, with France, Spain and Italy all above the euro zone average. (Reuters)

Source: www.businessworld.ie

 

More articles from Economy

image Description

Irish economy to grow by 4.7% in 2018

Read more
image Description

Ireland has a vibrant employment climate say recruitment experts

Read more
image Description

February issue of the Dublin economic monitor launched

Read more
image Description

ESRI warns more regional development needed to help economy

Read more
image Description

Irish economy in new post-recovery phase says Ibec

Read more

Advertisement

Latest News