In September, Eurozone inflation rose at an annual rate of 1.5 %, falling short of economists’ forecasts and leaving the ECB (European Central Bank) questioning whether the economy is strong enough to roll back its bond-buying program. Weak inflation in France and Spain, as well as fall in unemployment in Germany, indicates a strong eurozone recovery. However, the latest inflation reading comes at a sensitive time as the ECB prepares for meeting on October 26th where policymakers are set to discuss scaling back the bond buying program.
Recently, the biggest price increases in eurozone inflation figures were in energy, where prices rose an annualized 3.9 % in September, services, up 1.5%, and alcohol and tobacco up 1.9 %. Core inflation, excluding energy and unprocessed foods, came in at 1.3 %.
In the latest announcement of the ECB on September 21st, policymakers heaved warning that headline inflation could drop as low as 0.9 % in the first quarter of 2018. This is a result of fast growing prices in volatile sectors such as unprocessed food and energy.
German consumer prices rose at an annualized rate of 1.8 %.
France’s annualized inflation rate was reported to be 1 %.
Spain reported a fall in inflation. Consumer price index up 1.9 % annually.
Next European Central Bank meeting: October 26th, 2017.