Home > EU > Euro zone inflation rises by less than expected

Euro zone inflation rises by less than expected

Written by Business World, on 30th Nov 2017. Posted in EU

article headline

Euro zone inflation rose by less than expected in November, highlighting that price growth remains weak in the bloc and supporting the European Central Bank's plan to remove stimulus only gradually.

Inflation in the 19-country single currency area rose to 1.5% in November from 1.4% in October, missing expectations for an increase to 1.6% and remaining below the ECB's target of close to but below 2%.

Eurostat's flash estimate for the month does not include a month-on-month calculation.

The inflation was largely because of stronger energy prices, which were up 4.7% annually in November, from a 3.0% increase in October.

Unprocessed food prices were 2.4% higher, compared with a 2.8% rise last month.

Calculated without these two most volatile components, what the ECB calls core inflation was steady at 1.1%, against expectations of a slight dip to 1.0%.

Although higher than expected, it shows there is only limited price pressure in the pipeline.

Last month, the ECB took its first step towards weaning the euro zone off ultra-loose money by saying that from January it will halve the amount of bonds it buys every month to 30 billion euros. It nevertheless promised years of stimulus and left the door open to backtracking.

In other data released on Thursday, solid economic growth helped bring down euro zone unemployment to the lowest level since January 2009, beating market expectations.

The unemployment rate fell to 8.8% of the workforce or 14.34 million people in October from 8.9%, or 14.43 million, in September. Economists polled by Reuters had expected an unchanged rate of 8.9%.

The ECB's problem is that while the bloc has created over 7 million jobs since the worst days of its crisis, slack in the labor market remains large, keeping a lid on wages and ultimately inflation. (Reuters)

Source: www.businessworld.ie

More articles from EU

image Description

EU ready to open talks with US to fix trade row

Read more
image Description

EU will act against US tariffs on steel

Read more
image Description

Soros warns US-Europe alliance "destruction" may cause major crisis

Read more
image Description

Italian bonds suffer worst day in more than 25 years

Read more
image Description

Euro near 6 month lows, Asian shares fall on Italian turmoil

Read more