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Eurozone Inflation Remains Soft

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Eurozone Inflation Remains Soft

Updated inflation figures continue to trickle in for various Eurozone economies and the clear signal is that there a further softening in the price growth situation.

Portugal has just reported it’s final Consumer Price Index (CPI) for the month of April. Year on year this number remains negative at –0.1% although slightly up from -0.4% in March. The month on month version of this number was 0.3% compared to the previous reading of 1.4%.

Earlier this morning Italy also took the opportunity to release it’s final April inflation readings. The domestic calculation yielded a slight rise in inflation but the EU normalised numbers came in significantly lower. Italy’s CPI year on year for April has come in as expected at 0.6%, this represents a pickup from March’s 0.4% reading. Month on month this number also came in as anticipated at 0.2%, again a slight pick up on the March figure of 0.1%.

At an April reading of 0.5% year on year the EU-Norm CPI for Italy missed the market consensus number of 0.6% but was however higher than the 0.3% price growth produced in March. Month on month the figure was 0.5%, this came in lower than the expected 0.6% price inflation predicted by economists, it also sharply missed the rather spurious 2.2% price growth reported in March.

Although the Eurozone is not in deflationary territory yet there has now been a lack of price growth for an extended period of time. This is a situation that is causing much concern among member states as well as the international community. The European Central Bank once again forewent the opportunity to take monetary easing action last week in favor of a prolonged wait and see approach. At this stage anything short of a measurable pick up in European price inflation will leave the ECB no choice but to act at the June meeting.

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