Euro zone inflation subdued as employment keeps falling

BRUSSELS Fri Jun 14, 2013 12:51pm EDT

A picture illustration taken with the multiple exposure function of the camera shows a one Euro coin and a map of Europe, January 9, 2013. REUTERS/Kai Pfaffenbach

A picture illustration taken with the multiple exposure function of the camera shows a one Euro coin and a map of Europe, January 9, 2013.

Credit: Reuters/Kai Pfaffenbach

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BRUSSELS (Reuters) - Inflation in the euro zone rose from a three-year low in May, but remained low enough for the European Central Bank to act to boost an economy which is shedding jobs at an increasing rate.

The central bank expects economic recovery in the euro area to kick in later this year, but sees risks to growth from governments' continued austerity programs and as companies struggle to access credit from banks.

Prices of electricity, fruit and vegetables lifted annual inflation in the currency bloc to 1.4 percent in May compared to 1.2 percent in April, the EU statistic agency Eurostat said, confirming preliminary estimates.

Price growth, however, is still well under the ECB's target of close to, but below, 2 percent. At its policy meeting last week, the bank discussed a raft of options it could take if the euro zone economy does not emerge from recession later this year.

The euro zone's malaise was visible in a 0.5 percent drop in employment first three months of the year from the previous quarter. The data from Eurostat reflected an unemployment rate that reached a record high in April, with 19.4 million people out of work.

The first quarter fall in employment was deeper than the 0.3 percent decline in the last three months of 2012, and meant the number of people in jobs was 1.0 percent lower than a year ago.

"It highlights the fact that the euro zone continues to face major headwinds and still has its work cut out to return to sustainable growth," Howard Archer, chief European economist at IHS Global Insight, said in a note.

European Union leaders have vowed to crack down on rising unemployment, especially among the young, and focus on how to encourage growth amid the tighter economic conditions.

(Reporting by Martin Santa; Editing by Toby Chopra)

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Comments (4)
onlyif wrote:
“Economic recovery in the euro area is expected to kick in later this year” – hey, that’s what i heard in… was it…. hmmm….2010, 2011, or 2012…

fool me once…blah blah blah blah

Jun 14, 2013 6:14am EDT  --  Report as abuse
ArvindAshta wrote:
Unfortunately, there’s no like button. But I agree with you.

The problem with Europe is that they have blocked out wealth from flowing back in. As Indians and Chinese get richer, there should be a huge inflow of tourists and spending on European cultural goods.

As spending on cultural goods increases, our own lads and lasses will be occupied in providing higher value cultural goods (entertainment, theatrical demonstrations of history at histroical sites, besides crystalware, potterie, etc), thus increasing value even for local Europeans.

However, the EU has not been able to capitalise on this. They still refuse visas instead of building hotels and increasing security and employment of millions of small businesses and guides.

Many tourists may not even want hotels: they may want cheap tents or caravans, within their budget. This could be a whole new segemnt to cater to.

Jun 15, 2013 4:14am EDT  --  Report as abuse
goldsilverbug wrote:
Hahahhaha. You mainstream nitwits cannot help but reiterate all the government propaganda without really checking facts.

Do you guys ever go shopping! Inflation is Europe is out of control, also in the “strong” northern EU contries.
Of course. If you believe the CPI propaganda which calculation methods are changed every year to make sure the result remains subdues, then you are right.
Of course, I am not buying TVs and laptops every day,but food, energy, insurance.
On top all tax increases take away some of my purchasing power, which is also inflation to me.

Unemployment decreases? LOL. Again, fudged numbers takng people out of the statics that gave up looking for jobs or retire at 53 living off state welfare.

You mainstream journalists are a joke and a disgrace to independent critical journalism.

Jun 15, 2013 4:23am EDT  --  Report as abuse
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