2nd June 2015
Inflation in the euro zone re-entered positive territory in May to surpass consensus forecasts, according to the flash estimate from Eurostat.
The headline consumer price index (CPI) figure rose to 0.3 per cent in May, beating expectations for a rise of 0.2 per cent. Furthermore, the report showed that core inflation - which excludes the effects of volatile factors - rose by 0.9 per cent; a nine-month high.
It’s welcome news after the previous months of flat or negative inflation, and will give the European Central Bank (ECB) ammunition to tout the rapid results of its quantitative easing programme.
Howard Archer, chief European and UK economist at IHS Global Insight, noted that the positive figures have raised questions on whether the ECB needs to “fully implement” its QE programme.
However, the ECB is “diluting” such market questioning in order to “keep downward pressure on the euro and euro zone bond yields”.
The end date for the ECB’s sovereign bond buying programme is September 2016.
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