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Euro zone inflation perks up

Friday, January 29, 2016 - 01:24

Euro zone inflation strengthens as investors search for signs of a stronger start to 2016 amid a raft of key price and growth data, but German consumer spending has weakened. David Pollard reports.

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A small sigh of relief for Mario Draghi, perhaps - as euro zone inflation shows a welcome tick upwards. The rate of change in headline prices, the main indicator watched by the ECB and its chief, has risen to 0.4 percent from 0.2 percent. Stripping out volatile food and energy, prices rose to 1 percent from 0.9 percent, reversing the previous month's fall. Commerzbank's Peter Dixon. SOUNDBITE: Peter Dixon, Global Financial Economist, Commerzbank, saying (English): "I think we'll get a little more downward pressure on inflation over the course of the next couple of months, as the recent oil price slide feeds through, but I suppose the good news is that inflation has probably reached the bottom." It may not stay the ECB's hand when it comes to an expected extra round of stimulus in March. A rebound in investment in France helped support fourth-quarter growth there - GDP up 0.2 per cent on the quarter. Spain also showing resilience with a rise of 0.8 per cent on the quarter. But perhaps more worryingly, German retail sales dipped by 0.2 per cent in December for a weak end to the year. SOUNDBITE: Peter Dixon, Global Financial Economist, Commerzbank, saying (English): "Consumer activity accounts for by far and away the largest proportion of spending in Germany, as it does in all Western economies. If the consumer isn't spending, then that's bad news, because exports are going to take a hit from what's happening in emerging markets, and of course that's going to impact on corporate investment decisions too. " Economists were looking for a stronger start to 2016 after last year. They may not have found it, quite yet.

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Euro zone inflation perks up

Friday, January 29, 2016 - 01:24