Brussels. Eurozone inflation registered a rebound in October, slightly above expectations, and stood at 2.0 percent annually, although it generally remained aligned with the goal defined by the European Central Bank (ECB).
In September, euro zone inflation had been estimated at 1.7 percent. For October, the market expected an index of 1.9 percent, so the 2.0 percent reported by the European statistics agency Eurostat was above the forecast.
The Eurostat agency announced that the prices of services increased 3.9 percent in October, while the food category (which includes tobacco and alcoholic beverages) rose 2.9 percent.
Services had already increased 3.9 percent in September, but food saw an increase of half a percentage point.
Simultaneously, energy prices experienced a decline of 4.6 percent.
Meanwhile, core inflation – which excludes products with volatile prices from the measurement – remained stable at 2.7 percent, although the market expected a slowdown to 2.6 percent.
This scenario keeps the ECB at the center of attention, which began cuts in its reference rates starting in June.
The day before, Eurostat announced that the gross domestic product (GDP) of the eurozone grew 0.4 percent in the third quarter of the year, a result that also exceeded expectations but pales in comparison to the 0.7 percent that the United States recorded in the same period.
Thus, the ECB is expected to maintain the trend of cutting reference rates at its December meeting.
“Touch of realism”
Among the main economies of the eurozone, Germany registered inflation of 2.4 percent in October, France 1.5 and Italy 1.0 percent.
Spain recorded inflation of 1.8 and Portugal 2.6 percent, according to Eurostat.
At one extreme, Slovenia recorded inflation of 0.0 percent in October while Belgium had the highest indicator, 4.7 percent.
However, Germany’s 2.4 percent focused attention since the country had shown inflation of 1.8 percent in September, and in the third quarter of the year the EU’s economic locomotive escaped a recessionary trajectory.
For economist Bert Colijn, of the ING bank, the inflation result in October represented a “touch of realism about the disinflationary process in the euro zone.”
For his part, expert Andrew Kenningham, from the consulting firm Capital Economics, highlighted that even with the rebound in October, inflation still moves within the parameters established by the ECB.
“Euro zone inflation came in slightly above expectations in October, but still remained below the ECB’s projections for the fourth quarter,” the expert said.
Therefore, he added, “although (ECB) officials this week rejected the argument for faster rate cuts, we still think they are likely to conclude in December when a rate cut of half a percentage point is appropriate.”
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