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Euro FIG Nears 5-Year High

Underlying price pressures in the euro zone rose further in September to a near five-year high, an index compiled by the Economic Cycle Research Institute showed on Friday.

ECRI, which designs indices aimed at predicting business cycles in leading economies, said its Eurozone Future Inflation Gauge (EZFIG) rose to 104.1 in September from an upwardly revised 103.3 in August.

"Following the upturn in the (gauge), euro zone inflation rose to a 51-month high in September," the New York-based institute said. "Meanwhile the (gauge) rose further in September to a 58-month high, suggesting that the uptrend in euro zone inflation will continue."

The euro zone's latest official inflation reading showed year-on-year price growth at 2.5 percent in October, down from 2.6 percent in September but still well above the European Central Bank's target ceiling of 2.0 percent.

The ECB kept interest rates on hold at historic lows of 2.0 percent on Thursday but reiterated that it was on high alert for any signs that high oil prices were feeding through to other prices and wage claims.

The ECRI gauge aims to anticipate cyclical swings in the region's inflation rate and changes in official interest rate policy by measuring underlying inflationary pressures, rather than actual inflation rates.

It is similar to ECRI's inflation indices for the United States, Britain and Japan.

The gauge for Germany rose to a 51-month high of 86.3 from 86.1, while the French gauge rose to 102.7 from 102.6, slightly below July's 49-month high but still in an uptrend.

The Italian gauge, which has been in an uptrend since 2004, rose further to 101.7 from 101.2, and the Spanish gauge to 181.4 from 176.2, showing strong inflationary pressures persisting in Spain.

ECRI said the gauges suggested headline inflation would continue to rise in all four major euro zone economies.

The euro zone gauge uses a weighted average of ECRI's indices for Germany, France, Italy and Spain...