Eurozone inflation rate rises
Source: Agencies |
January 6, 2010, Wednesday
|
Print Edition
Print Edition
THE annual inflation rate in the 16 countries that use the euro rose to a 10-month high in December but still remains way below the European Central Bank's ceiling, official figures showed yesterday.
In its flash estimate for the month, Eurostat, the EU's statistics office, said consumer prices increased 0.9 percent in the year to December, up from November's 0.5 percent.
Eurostat did not provide an immediate reason for the increase, which was toward the top end of market expectations. However, analysts were expecting a rise given the recent spike up in oil prices, in particular - a year ago a barrel of benchmark crude on the New York Mercantile Exchange was about US$40, half the current price.
December's rate was the highest since February's 1.2 percent.
From June to October 2009, prices had fallen as the previous year's sharp increase in energy prices dropped out of the annual comparison and the severity of the economic recession dampened inflationary pressures.
Analysts doubt that runaway inflation will become a major headache for the European Central Bank - it is tasked to set interest rates to aim for annual price increases of just below 2 percent - given high unemployment and subdued consumer demand.
Frederik Ducrozet, eurozone economist at Calyon Credit Agricole, said base effects, particularly related to global energy prices, are likely to be less relevant in the coming months, while inflationary pressures in Greece, Spain and Ireland continue to ease amid mounting economic problems.
"We are only looking for a modest rise in eurozone inflation to around 1.5 percent by mid-year," said Ducrozet.
Against this background, analysts expect the European Central Bank to keep its benchmark interest rate unchanged at the historic low of 1 percent when it meets next week.
In its flash estimate for the month, Eurostat, the EU's statistics office, said consumer prices increased 0.9 percent in the year to December, up from November's 0.5 percent.
Eurostat did not provide an immediate reason for the increase, which was toward the top end of market expectations. However, analysts were expecting a rise given the recent spike up in oil prices, in particular - a year ago a barrel of benchmark crude on the New York Mercantile Exchange was about US$40, half the current price.
December's rate was the highest since February's 1.2 percent.
From June to October 2009, prices had fallen as the previous year's sharp increase in energy prices dropped out of the annual comparison and the severity of the economic recession dampened inflationary pressures.
Analysts doubt that runaway inflation will become a major headache for the European Central Bank - it is tasked to set interest rates to aim for annual price increases of just below 2 percent - given high unemployment and subdued consumer demand.
Frederik Ducrozet, eurozone economist at Calyon Credit Agricole, said base effects, particularly related to global energy prices, are likely to be less relevant in the coming months, while inflationary pressures in Greece, Spain and Ireland continue to ease amid mounting economic problems.
"We are only looking for a modest rise in eurozone inflation to around 1.5 percent by mid-year," said Ducrozet.
Against this background, analysts expect the European Central Bank to keep its benchmark interest rate unchanged at the historic low of 1 percent when it meets next week.
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