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EZ FIG at 7-month low


Inflationary pressures in the euro zone fell to a seven-month low in June, pulled down by an easing in Germany and Spain, according to an indicator designed to predict inflation trends from the Economic Cycle Research Institute.

The New York-based ECRI said its Eurozone Future Inflation Gauge (EFZIG) fell to 100.3 in June from 100.6 in May.

'With the EZFIG continuing to ease and falling to a seven-month low in its latest reading, underlying euro zone inflation pressures have clearly begun to wane,' said Lakshman Achuthan, ECRI's chief operations officer.

Inflationary pressures eased in Germany, Europe's largest economy, with its index dropping to 101.9 from May's 102.4, while Spain's sank to 92.7 from 94.7. Pressures remained subdued in Italy and held flat in France.

European Central Bank President Jean-Claude Trichet signalled on Thursday that although rates were left on hold at 1.5 percent, they could rise further to tame inflation despite recent data indicating that economic growth is easing.

The ECB is expected to hike rates to 1.75 percent in the fourth quarter according to a Reuters poll taken last week.

Inflation in the 17-nation bloc fell unexpectedly to 2.5 percent in July, still considerably above the ECB's two percent target ceiling, according to flash data released last week.
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