News Column

Euro Inflation Edges Up to 2.7 Percent

Sept. 28, 2012

Alexandra Mayer-Hohdahl, dpa


Annual inflation in the eurozone rose to 2.7 per cent in September, data released on Friday showed, defying expectations of a decrease and adding pressure on the European Central Bank (ECB) amid the currency area's debt crisis.

The rate was up from 2.6 per cent in August, driven mainly by an increase in energy prices, Eurostat - the European Union's statistics office - said as it released the preliminary data.

Analysts had forecast inflation falling back to 2.4 per cent.

They largely blamed the outcome on a few countries with inflation rises, such as Spain - where a VAT increase led its rate to surge from 2.7 per cent to 3.5 per cent - and Italy.

"The (overall) increase is unlikely to mark the start of a sustained upward trend," said economist Ben May of the Capital Eocnomics research group. "Food and energy inflation are likely to fall over the coming months and core inflation should also ease."

"Inflation is likely to remain elevated over the coming months. However, it should moderate throughout next year," Frederic Cerisier of BNP Paribas added.

The data is part of the build-up to the monthly meeting on Thursday of the ECB's governing council. The central bank has an annual target of 2 per cent for inflation, but the rate has been over that for the last 22 months.

The central bank could raise interest rates to help rein in inflation, but has so far chosen to keep them low as part of the fight against the eurozone debt crisis.

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Source: Copyright 2012 dpa Deutsche Presse-Agentur GmbH

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