- Rabobank
The Euro zone slipped again into deflation, Eurostat confirmed the earlier estimate. Consumer prices in the currency bloc recorded negative growth for the first time since March, adding to signs that the ECB's ongoing stimulus programme might not be sufficient to support the region's economy and return inflation to the targeted level of just below 2%. The consumer price index in the 19-nation bloc declined 0.1% in annual terms in September after the 0.1% rise a month earlier. However, the gauge was slightly more positive when measured on a monthly basis, with prices climbing 0.2% compared to flat growth in August and 0.2% forecast. At the same time, the core CPI, which stripped out volatile components such as energy, food, alcohol and tobacco, edged higher 0.9% on year in September.
Persistently weak and even sub-zero inflation readings are building the pressure on the European Central Bank to deploy further easing measures. ECB Governing Council member Ewald Nowotny said more needed to be done to support inflation. Nowotny added that the additional measures should involve structural tools as well as measures to underpin demand.
© Dukascopy Bank SA