-Antonio Barroso, an analyst at Teneo Intelligence
Germany and France both accounts for a majority of overall economic activity in the Eurozone, almost two thirds to be more precise. Therefore, reports from both economies sometimes have even stronger effect than the data from the whole region.
With less than one month left before another ECB's meeting, each report will be treated more carefully. Therefore, acceleration in German inflation was welcomed by markets. On Wednesday, the Federal Statistics Office said the costs of living in Germany advanced 1.3% in April, accelerating from just 1.0% in March and coming in line with analysts' expectations. The figure provides a relief for policymakers as over the last several weeks statistics from Germany only disappointed markets.
In contrast, consumer prices in France stagnated in April, missing expectations for a 0.1% increase. On an annual basis, inflation rose 0.7%, but also short of markets' forecasts. With more economic pain to come from taxes, and spending cuts, we are not likely to see any improvement in the coming months. The economy is expected to expand just 0.1% in the first quarter. At the same time, Hollande's approvals rating reached an all-time low of just 18%. The unemployment still remains at a record of more than 3 million.
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