Eurozone HICP: Sep: 1.8%, Aug: 1.6%, Jul: 1.7%, Jun: 1.4%

FRANKFURT (MNI) – Harmonized consumer prices in the Eurozone rose
in September by 1.8% on an annual basis, Eurostat reported Friday,
confirming the flash estimate.

On the month, consumer prices in the euro area were up a modest
0.2%, Eurostat said. Both the annual and monthly data were in line with
analysts’ expectations.

Excluding energy, prices were 0.2% higher on the month and 1.2%
higher on the year. Consumer prices excluding energy, food, alcohol and
tobacco, the measure most closely watched by the European Central Bank,
were 0.2% higher on the month and 1.0% higher on the year. Energy prices
were up 0.3% on the month and gained 7.7% on the year.

Among individual categories, food prices were up 0.1% on the month
and were up 1.2% on the year. These may feel some upward pressure going
forward, as weather-related issues have cut harvest yields in many parts
of the world.

Perhaps reflecting a reversal of summer sales, clothing prices
skyrocketed 6.5% on the month, while gaining only 0.2% on the year.
Housing gained 0.2% on the month and were up 2.9% on the year. Transport
prices fell 0.4% on the month and rose 4.1% on the year.

Broken down by country, Greece had the highest annual inflation
level — doubtlessly reflecting hikes in VAT and other taxes resulting
from the country’s austerity program — recording a 5.7% gain in
September. Greek consumer prices were 1.9% higher on the month.

All countries had positive annual rates of change in prices except
for Ireland, where prices fell 1.0%. On the month, they were down 0.2%.

Among larger countries, the fastest rate of annual change was in
Spain at 2.1%, followed by France (1.8%) and Italy (1.6%), Eurostat
reported. The lowest rate of change among the big four was in Germany
(1.3%). On the month, Germany printed -0.2%, France and Spain were both
flat and Italy was at +0.6%.

Leading European policymakers argue that while there are currently
limited risks to price stability, the risks lean slightly upwards.

“The monetary analysis confirms that inflationary pressures remain
contained. Indeed, the baseline view implies a medium-term outlook for
price developments in line with price stability,” a recent ECB statement
said.

Policymakers see neither deflationary nor inflationary risks at the
present time, it added.

The ECB conceded in its Monthly Bulletin, however, that risks to
price developments were “slightly tilted to the upside,” relating to
energy and non-fuel commodity price developments.

“Furthermore, increases in indirect taxation and administered
prices may be greater than currently expected, owing to the need for
fiscal consolidation in the coming years,” the ECB said.

— Frankfurt bureau: +49 69 720 142; e-mail: frankfurt@marketnews.com —

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