EU Inflation Rose 1.5% in August

Euro zone inflation rose to 1.5 percent year-on-year in August, narrowly beating analyst expectations and edging slightly closer to the European Central Bank’s (ECB) target, according to flash estimates released by Eurostat on Thursday.

The European Union’s statistics office projected consumer prices in the euro zone would reach its highest level in four months in August. The estimate is the highest rate since April, when inflation stood at 1.9 percent, and could raise expectations that the ECB will soon start to wind down its ultra-loose monetary policy.

Eurostat’s August forecast of 1.5 percent is up from 1.3 percent in July and above market expectations for a 1.4 percent rise.

Meanwhile, core inflation – a measure which excludes the two most volatile components of food and energy and is closely watched by the ECB – was stable at 1.3 percent in August. Market expectations had predicted core inflation rates would slip to 1.2 percent this month.

Last week, ECB President Mario Draghi had called for investors to remain patient regarding the furor over the central bank’s ultra-loose monetary policy. Speaking at Jackson Hole on Friday, Draghi stressed that more time would be required in order for inflation to reach the 19-member bloc’s target of 2 percent.

However, higher-than-expected inflation estimates on Thursday are likely to increase the pressure on ECB officials ahead of a policy meeting next week.

via CNBC

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza