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Eurozone FIG Eases

BANGALORE, Nov 5 - Inflationary pressures in the euro zone eased in September, according to a forward looking indicator from the Economic Cycle Research Institute.

New York-based ECRI said its Eurozone Future Inflation Gauge (EFZIG) fell to 97.1 in September from 98.6 in August, pushed down by disinflationary pressures in Germany and Spain which were partly offset by increasing pressures in France and Italy.

'Euro zone inflationary pressures, after having steadily risen for over a year, are now starting to dissipate,' said Lakshman Achuthan at ECRI.

According to the survey, euro zone inflationary pressures have waned with the EZFIG retreating from August's 22-month high but inflation in the euro zone continued to remain in a cyclical uptrend.

Euro zone consumer prices rose 1.9 percent year-on-year in October, well within the European Central Bank's price stability target of close to 2 percent and CPI is expected to stay below that at least until the end of 2011.

On Thursday, the ECB kept rates on hold at 1.0 percent as expected and said price pressures were contained and remained moderate.

The 16-country bloc's central bank also stuck to the view that the euro zone's recovery has enough momentum to ride out any bumps in the road.

'Recent economic data are consistent with our assessment that the underlying momentum of the recovery remains positive. At the same time, uncertainty is prevailing,' said ECB President Jean-Claude Trichet.

With severe budget austerity measures likely to curb growth in the region's stronger economies in coming months and some of the peripheral members of the euro area still struggling to generate growth, inflation is expected to remain in check.