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Inflation up but not enough for ECB

Monday, October 17, 2016 - 01:45

Higher prices in restaurants and cafes as well as higher rents pushed up inflation in September offsetting the pull from cheap energy prices. As Sonia Legg reports, that should help the ECB which holds its monthly meeting this week.

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Eating out in the euro zone is getting dearer - prices are increasing in restaurants and cafes and cigarettes cost more too. Figures from Eurostat - the EU's statistics office - show food, alcohol and tobacco rose 0.7 percent year-on-year in September with unprocessed food 1.1 percent more expensive. Energy prices were also up 1 per cent from August. But year-on-year they were 3 percent lower, pulling the overall inflation rate down to 0.4 percent. It leaves the ECB's two percent inflation target looking like a dream. (SOUNDBITE) (English) CHIEF ECONOMIST AT WORLD FIRST, JEREMY COOK, SAYING: "Growth simply isn't strong enough to be able to reliably create meaningful inflation going forward. It's why I think any chatter around some form of tapering away of the asset purchase plan of the European Central Bank is a little bit misguided." The ECB has been buying 80 billion euros worth of government bonds each month to try and inject more cash into the banking system so they in turn will help boost economic growth. But numerous factors keep scuppering the plan. (SOUNDBITE) (English) CHIEF ECONOMIST AT WORLD FIRST, JEREMY COOK, SAYING: "I wouldn't be surprised if at the ECB's meeting on Thursday we see Mario Draghi re-iterate the committee's view that monetary policy has to stay in place for longer." China's slowdown is a key issue. GDP figures this week are expected to show it's still slowing as the switch from manufacturing to a more service-based economy takes time . (SOUNDBITE) (English) CHIEF ECONOMIST AT WORLD FIRST, JEREMY COOK, SAYING: "China's economy is still based around external demand, aggregate demand here in Europe, the US and from other emerging market economies is simply not strong enough at the moment." Brexit uncertainty remains too - not to mention the U.S. election, although that at least will be over next month.

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Inflation up but not enough for ECB

Monday, October 17, 2016 - 01:45