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Eurozone inflation pressures stay low in August


Euro zone inflationary pressures stayed weak in August despite increasing a tad from the previous month, suggesting inflation could continue to fall, according to an indicator designed to predict cyclical trends.

The Eurozone Future Inflation Gauge (EZFIG) inched up to 94.0 in August from 93.8 in July.

'While the EZFIG increased in August, it stayed well below last year's highs and remains near June's 27-month low. Thus, euro zone inflation pressures are still quite weak,' Lakshman Achuthan, ECRI's chief operating officer said.

Inflationary pressure as measured by the EZFIG touched a 27-month low of 93.2 in June. Although the gauge has shown a slight uptick since then it remains in a cyclical downswing.

Euro zone headline inflation accelerated to a faster-than-expected 2.7 percent year-on-year in September as energy costs soared, a preliminary release showed last week.

But weak core prices will solidify expectations for a rate cut by the European Central Bank (ECB) soon.

At a press conference on Thursday following the ECB's rate setting meeting, bank President Mario Draghi said high energy prices and increases in indirect taxes in some euro area countries would keep inflation above the central bank's 2 percent target throughout 2012.

The ECB left its key interest rate on hold at a record low of 0.75 percent but said it expects inflation to fall below 2 percent over the course of next year.

VIEW THIS ARTICLE ON REUTERS

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