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Euro Zone Price Rises Steady in August Despite Further Drop in Core Inflatio
Euro Zone Price Increases Steady in August Despite Core Inflation Decline
Euro zone price rises were steady in August despite a further decline in core inflation, according to the latest figures from the European Central Bank.
The ECB reported that headline inflation for the region rose to an annual rate of 5.3% in August, up from 4.9% the previous month and in line with expectations. Core inflation, which excludes volatile energy and unprocessed food prices, however, fell to 1.4%, its lowest rate since September 2017.
The monthly increase in headline inflation was largely driven by rises in the cost of energy and services, while food and non-alcoholic beverages, furniture and recreational and cultural goods and services also contributed to the overall price rise.
At the same time, the weak euro weighed on prices in August, as the region’s currency remains below the levels of a year ago. Meanwhile, wages in the euro zone registered a 1.3% annual increase, which analysts say is insufficient to generate sustained consumer price pressure.
The latest data suggests that the ECB’s efforts to stimulate the region’s economy have yet to have an impact on consumer prices, and the bank is likely to remain cautious in increasing the pace of its expansionary policies.
The ECB’s president, Christine Lagarde, conceded that there is a risk of the euro zone’s recovery losing momentum and noted that the central bank was ready to adjust policy if necessary.
In the meantime, the overall trend of slow inflation is likely to remain, and it will be up to the ECB to take a decisive stance in order to keep inflation from falling further.Euro Zone Price Rises Steady in August Despite Core Inflation Decline
The Euro Zone saw price rises remain steady in August, according to figures released by the European Central Bank (ECB). The annual inflation rate in August was recorded as 5.3%, slightly above expectations of a 5.1% increase and unchanged from July’s figure.
The steady inflation rate figures may be seen as a positive sign for the European economy, indicating that prices are still increasing steadily while wages continue to rise and consumer spending remains robust.
However, a closer examination of the figures reveals a more mixed picture. The core inflation rate, which excludes volatile items such as energy and food prices, continued to fall, dropping to 0.4% in August from 0.6% in July. Core inflation has been on a downward spiral since July 2018, when it was at 1.2%.
The decline in core inflation has been largely attributed to weak economic activity and the weak labour market in the EuroZone. The current rate is significantly lower than the ECB’s target rate of close to 2%.
The ECB has consistently expressed its concern over the weak core inflation numbers and its impact on the EuroZone economy going forward. The central bank has been taking a range of measures to support the economy, such as cutting interest rates, ramping up its quantitative easing program, and offering cheap loans to businesses.
The ECB is likely to remain vigilant in its monitoring of the inflation rate, as it seeks to promote economic growth and ensure its policy decisions are effective at stimulating the economy. While the August figures may be a cause of concern, they should not be seen as a sign of a looming crisis. With the right measures, the EuroZone should be able to maintain price rises and support the economy for the foreseeable future.August saw a steady rise in prices in the Eurozone, despite a further decrease in core inflation, according to figures released by Eurostat, the European Union’s statistical office, on Thursday.
The seasonally adjusted annualized rate of inflation in the Eurozone was at 5.3 percent in August, which was slightly higher than the 5.1 percent which economists had expected, and marginally more than the 5.2 percent reported in July.
The core rate of inflation, which excludes volatile items such as energy and unprocessed food, fell to 1.4 percent in August, down from a rate of 1.5 percent in July. This is the lowest level since the core inflation rate began to be tracked in 1997, and follows a string of low readings dating back to April, when the rate was at 1.6 percent.
The slight rise in the headline rate of inflation can be attributed to rising transport costs, with the prices of air fares, passenger transport services and car fuels all rising since July.
The fall in the core inflation rate suggests that the underlying rate of inflation remains muted despite the Eurozone economy having started to recover from the impact of the pandemic. This is likely to be of some comfort to the European Central Bank which is currently engaged in quantitative easing in order to support the economy.
However, the ECB will be keen to ensure that inflation remains subdued, and although the latest figures show a slight pick up in the headline rate, the central bank may still need to do more to achieve its target of just below 2 percent.