Euro-Zone CPI Fails to Impress, ECB to Hold Dovish Outlook

Daily Forex Fundamentals | Written by DailyFX | Oct 15 08 09:24 GMT |

Euro-Zone September HICP inflation was confirmed at 3.6% y/y, unchanged from the preliminary number and down from 3.8% y/y in August. Prices rose 0.2% m/m. Core inflation remained steady at 1.9%, that is slightly below the ECB's upper limit for price stability. The deceleration in the headline rates was mainly due to base effects as a sharp rise in food prices in September last year fell out of the equation and brought annual food price inflation down to 5.7% y/y from 6.2% y/y in August. Energy prices rose 0.3% m/m and the annual rate decelerated to 2.6% y/y from 2.7% y/y in the previous month. Data confirm that inflation peaked in July and with growth slowing down rapidly the headline rate will fall quicker towards the ECB's 2% limit than previously expected. This should give the ECB room for further rate cuts. Some risks of second round effects via higher wage demands remain, however. There is also some risk that governments will try to finance some of the rescue package for financial markets via indirect taxes, which could also push up inflation. DailyFX Disclaimer Investment in the currency exchange is highly speculative and should only be done with risk capital. Prices rise and fall and past performance is no assurance of future performance. This website is an information site only. Accordingly we make no warranties or guarantees in respect of the content. The publications herein do not take into account the investment objectives, financial situation or particular needs of any particular person. Investors should obtain individual financial advice based on their own particular circumstances before making an investment decision on the basis of the recommendations in this website. While we try to ensure that all of the information provided on this website is kept up-to-date and accurate we accept no responsibility for any use made of the information provided. All intellectual property rights are the property of Daily FX. Daily FX and its affiliates, will not be held responsible for the reliability or accuracy of the information available on this site. The content herein is provided in good faith and believed to be accurate, however, there are no explicit or implicit warranties of accuracy or timeliness made by Daily FX or its affiliates. The reader agrees not to hold Daily FX or any of its affiliates liable for decisions that are based on information from this website. Daily FX highly recommends that before making a decision, the reader collects several opinions related to the decision and verifies facts from at least several independent sources.