- Howard Archer, HS Global Insight
The European statistics agency Eurostat confirmed that the inflation rate in the Euro zone slipped in September to the lowest level since October 2009 amid sinking energy prices. Annual consumer inflation in the 18-member union sharing the Euro was 0.3% in September falling down from August's 0.4% reading. Inflation has now been in the ECB's "danger zone" of below 1% for 12 straight months. The only bright spot for policymakers is core inflation, which strips out the more volatile components of headline inflation. The measure declined from 0.9% to just 0.8% in the year to September, a more marginal drop than the 0.7% expected by analysts. A separate report showed that the Euro zone's third biggest economy's current account surplus swelled in August from the previous year. Italy's current account surplus booked 2.056 billion euros compared to the revised 1.073 billion euros in August 2013.
Greece's exit from the bailout programme appeared to be under in jeopardy, as Greek 10-year yields rose 72 basis points to 8.58%, following a 85 basis points jump, the biggest surge since July 2012, when the country was on the verge of leaving the Euro zone. Current levels are unsustainable and could threaten once again to cut Greece off from financial markets. Investors are concerned whether Greece will be able to cover its financing needs from markets in case an early bailout exit.
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