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Further Fall In Eurozone Inflation

James Boston
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Further Fall In Eurozone Inflation

Eurostat, in the form of July’s preliminary Consumer Price Index (CPI) data, has just published the latest indication of the Eurozone inflation situation. Year on year the CPI for the single currency bloc now stands at 0.4%, this is in comparison to the final June reading of 0.5%, market expectations were for now change from this June level. The Core CPI year on year figure is currently reading at 0.8%, this is in line with last month’s 0.8% reading but misses a market consensus estimate for 0.9%.

Unemployment figures for June have also just been published by the Eurostat agency. The headline Unemployment figure for the Eurozone for the month of June is now 11.5%, by comparison the May figure was 11.6% and the consensus estimate was for no material change to this level.

Unemployment is gradually falling across the Eurozone, Germany and Italy have both recorded very minor improvements in their figures this morning, some of the periphery economies such as Ireland and Spain have in recent days published larger improvements but from a higher base. Across the Eurozone unemployment is improving at a somewhat glacial pace, particularly in comparison to other recovering developed economies, it is however moving in the right direction and is far from the largest problem being faced by the European Central Bank (ECB) currently.

The ECB has for another month not received the dramatic improvement in inflation that would justify their wait and see approach towards taking further definitive monetary easing action. It was back in March that the ECB declared the low inflation situation as temporary, as each monthly update rolls on this prediction appears more and more short sighted. The reluctance of the ECB to take out the big gun of quantitative easing has been to date somewhat understandable, it is a last resort solution, however the economic situation in the Eurozone is not improving at the rate of it’s peer developed economies, if at all.

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