Published: Fri, November 02, 2018
Economy | By

Eurozone inflation near 6-year high as oil price spikes | AP business

Eurozone inflation near 6-year high as oil price spikes | AP business

The Eurozone third-quarter GDP rose 0.2 percent over the quarter while decelerating to 1.7 percent y/y.

Growth in the eurozone slowed significantly in the third quarter, official data showed on Tuesday, as Italy's economic troubles weighed and vehicle production in Germany was disrupted. The growth figure for the previous quarter was 0.4 percent.

"We expect the ECB to stick to its plans to end asset purchases this year, but the recent run of weak data suggests that the bank will stress that policy tightening will depend on the incoming figures", Jessica Hinds, economist at Capital Economics, said. Growth in two of the bloc's four largest economies - Germany and Italy - ground to a halt, while sentiment among consumers and businesses in the region fell in October to the lowest in 17 months.

Italian Prime Minister Giuseppe Conte said the zero growth in Italy justified Rome's expansionary 2019 budget, which the European Commission has rejected because it breaks EU rules.

October's rate is the highest since December 2012, when inflation was also 2.2 percent.

Eurozone inflation rose to 2.2 percent in October, official data showed on Wednesday, moving further away from the European Central Bank's (ECB) target rate, as unemployment in the single currency zone remained stable.

The annual pace of economic growth was also slower than anticipated at 1.7 per cent during the three months to September, against forecasts for a 1.8 per cent rise. Faster price growth, especially in the measure that strips out temporary factors, would confirm the ECB's claim that the bloc is strong enough to withstand a gradual withdrawal of monetary support.

While the third-quarter economic slowdown came out on a shockingly low tide, the signs of the economic activity decelerating were already in place for some time.

The European Commission said on Tuesday that eurozone economic sentiment dropped in October for the 10th consecutive month.

In October the largest fall was recorded in retail services as managers held "much grimmer views on the present and expected business situation", the Commission said and the indicator of selling price expectations dropped.

In Italy the downward trend, which is coupled with economic stagnation in the third quarter, began in July, the month after a eurosceptic government took office in Rome.

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