Euro­zone in­fla­tion dip set to worry ECB

Business Daily (Kenya) - - THE OUTLOOK - FOOD

In­fla­tion in the 19 coun­tries shar­ing the euro rose this month but mea­sures of un­der­ly­ing price pres­sures dipped un­ex­pect­edly, likely fu­elling con­cern at Euro­pean Cen­tral Bank as it pre­pares to curb stim­u­lus.

With much of its fire­power ex­hausted, the ECB is slowly with­draw­ing sup­port, hop­ing it has done enough to kick start growth and in­fla­tion, even if price pres­sures still re­main rel­a­tively muted. Con­sumer prices in the euro­zone picked up as ex­pected to 2.1 per cent in Septem­ber from two per cent a month ear­lier but ex­clud­ing the cost of food and en­ergy, the rate fell to 1.1 per cent from 1.2 per cent.

This not only missed mar­ket pro­jec­tions but also ap­pears to chal­lenge the ECB own view that core in­fla­tion would be ris­ing to­ward the end of the year, fi­nally mov­ing higher af­ter be­ing stuck near one per cent for some time.

An even nar­rower gauge watched by mar­ket econ­o­mist, which also ex­cludes al­co­hol and to­bacco costs, dipped to 0.9 per cent from one per cent, also well short of ex­pec­ta­tions.

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