Published On: Tue, Sep 5th, 2017

Eurozone inflation rises, unemployment at 8-year low

BRUSSELS: Eurozone inflation rose closer to the European Central Bank’s 2.0 percent target in August confirming a tentative economic recovery in Europe, official EU figures showed Thursday.

The fresh data will reinforce hopes that, despite uncertainty and the unknowns of Brexit, the eurozone is emerging from the worst of the financial crisis that began in 2008.

Consumer prices in the 19-nation single currency area rose 1.5 percent, bolstering speculation that the ECB will roll back its crisis-fighting easy money policies as the euro area recovery picks up speed.

“In all, the data suggests that the ECB’s strong policy support is becoming less necessary,” said Capital Economics analyst Jennifer McKeown.

The ECB has set interest rates at record lows, offered cheap loans to banks and embarked on a 2.3-trillion-euro bond buying stimulus scheme in a bid to boost growth and push inflation upwards.

It is currently scheduled to buy 60 billion euros in bonds a month until the end of this year, and analysts expect the bank to begin gradually winding down the scheme, known as quantitative easing (QE), next year.

Closely watched core inflation, which strips out volatile energy prices, was flat at 1.2 percent, which is higher than the far lower rates seen for the past few years.

The data will “support the case for the ECB to taper its asset purchases next year, but it probably won’t announce its plan until next month,” analyst McKeown said.

The jobless rate in the 19-nation single currency area meanwhile remained stable at 9.1 percent, the lowest level since February 2009, the Eurostat statistics agency said.

Joblessness edged up in France and Italy last month, but fell in Germany, the eurozone’s economic powerhouse.

The highest unemployment rates were in struggling Greece, at 21.7 percent, and Spain at 17.1 percent, very high but well off much worse figures seen in past years.

Unemployment across the 28-nation EU was meanwhile stable at 7.7 percent in June, the lowest rate for the bloc since December 2008. – AFP

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