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Euro Zone Inflation Pressures Ease

Underlying price pressures in the euro zone eased in June after hitting five-and-a half year highs in April, but remained high and support expectations of further European Central Bank rate hikes, an index showed on Friday.

Data from the Economic Cycle Research Institute, which designs indices aimed at predicting business cycles, showed its Eurozone Future Inflation Gauge (EZFIG) inched lower to 104.6 in June from 104.7 in May.

"The EZFIG is still in a clear uptrend. Hence, inflationary pressures in the euro zone remain a concern," ECRI said in a statement.

Latest official data show inflation in the 12-nation euro bloc was running at 2.5 percent in July, the same rate as in June, and well above the ECB's target ceiling of 2 percent.

On Thursday, the ECB raised its benchmark refi rate to 3.0 from 2.75 percent as widely expected and signalled more hikes to come to rein in inflationary pressures.

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.

The gauge for Germany rose to 90.8 in June from 90.3 in May, holding close to five-and-a-half year highs...

French inflationary pressures fell slightly to 103.5 from 103.8 in May but remained at elevated levels while the Italian gauge also eased to 103.9 from 104.0.

"Although the (gauge) slipped in June, it remains well above earlier lows, suggesting that Italian inflation pressures are elevated," ECRI said.

The Spanish index also pulled back to 162.8 in June from 164.4 the previous month.

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