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Eurozone FIG Eases


Underlying price pressures in the euro zone eased in March, 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) slipped to 93.5 in March from a revised 94.3 in February.

"After increasing for two months, the EZFIG fell well below its 2000 highs, suggesting that euro zone inflation will stay subdued," ECRI said.

The 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.

ECRI said declines in price pressures in Germany and France in March were partly offset by modest increases in inflation pressures in Italy and Spain.

The German gauge dropped to 76.2 in March from 78.3 in February and ECRI said declines in the gauge since October 2002 suggested German inflation would stay subdued this year.

The French gauge fell to 101.0 in March from 101.2 in February. "Due to pervasive weakness in the components, the (French gauge) has declined since its September 2000 high," ECRI said. "In March, it fell to a 51-month low, indicating that French inflation pressures remain in a cyclical downtrend."

The Italian gauge edged up to 99.3 in March from 99.2 in February, a 28-month high. "Italian inflation is likely to remain in an uptrend this year," ECRI said.

The Spanish gauge rose to 128.6 from 127.5 and ECRI said it was "in an upswing, indicating that Spanish inflationary pressures are building up."