Euro zone inflation rose in April, reducing chances the European Central Bank will act soon to ward off deflation, but the pace of price rises was below forecast and still within the ECB's "danger zone" of under 1 percent.
Annual consumer inflation in the 18 countries sharing the euro nudged higher to 0.7 percent in April from March's 0.5 percent, which was the lowest since late 2009, the European Union's statistics office Eurostat said on Wednesday.
The reading was lower than the 0.8 percent predicted in a Reuters poll despite higher spending over the Easter period, reflecting the poor state of the euro zone economy after a long recession and with unemployment at near-record levels.
The euro briefly fell to a two-month low versus sterling on the data but then recovered, with some traders saying they expect markets to gain because the immediate chances of radical steps by the ECB are now lower. [ID:nL6N0NM34E]
Faced with inflation rates running far below target, the ECB has opened the door to money printing with so-called
"quantitative easing" (QE) to boost the euro zone economy, which is growing at a slower rate than much of the rest of the world.
Some economists expect the ECB to follow other major central banks like the U.S. Federal Reserve and embark on some form of QE later this year, but others say it is a long way off because the euro zone is nowhere near the most serious kind of deflation such as that which took hold in Japan in the 1990s.
April's reading takes inflation back to where it was in February but it is below the 1.2 percent of April 2013.
Still, the lack of a clear up-tick in consumer prices will keep pressure on the ECB to act to stimulate the economy, possibly by lowering rates again, although it is not expected to do so at its next policy meeting on May 8.
Source: Reuters
Annual consumer inflation in the 18 countries sharing the euro nudged higher to 0.7 percent in April from March's 0.5 percent, which was the lowest since late 2009, the European Union's statistics office Eurostat said on Wednesday.
The reading was lower than the 0.8 percent predicted in a Reuters poll despite higher spending over the Easter period, reflecting the poor state of the euro zone economy after a long recession and with unemployment at near-record levels.
The euro briefly fell to a two-month low versus sterling on the data but then recovered, with some traders saying they expect markets to gain because the immediate chances of radical steps by the ECB are now lower. [ID:nL6N0NM34E]
Faced with inflation rates running far below target, the ECB has opened the door to money printing with so-called
"quantitative easing" (QE) to boost the euro zone economy, which is growing at a slower rate than much of the rest of the world.
Some economists expect the ECB to follow other major central banks like the U.S. Federal Reserve and embark on some form of QE later this year, but others say it is a long way off because the euro zone is nowhere near the most serious kind of deflation such as that which took hold in Japan in the 1990s.
April's reading takes inflation back to where it was in February but it is below the 1.2 percent of April 2013.
Still, the lack of a clear up-tick in consumer prices will keep pressure on the ECB to act to stimulate the economy, possibly by lowering rates again, although it is not expected to do so at its next policy meeting on May 8.
Source: Reuters
