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Euro area mired in inflation

September 28, 2012

Increasing inflation remains a headache for most governments across the eurozone. Figures for September have gone up again mainly due to a marked increase in energy prices, putting more pressure on the ECB.

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Mouse eating away on a pile of euro coins
Image: BilderBox

Inflation in the 17-member eurozone went up again in September, the European Union's statistics office, Eurostat, announced on Friday.

Prices rose by 2.7 percent this month, after already increasing by 2.6 percent in August, official data showed. Analysts had only penciled in a 2.4-percent rise for September.

Eurostat said the figures reflected a sharp energy rate hike at 9.2 percent, while price increases for food, alcohol and tobacco came in at 2.9 percent in the eurozone.

ECB target missed again

Broken down to national level, the figures pointed to a very heterogeneous picture. Spanish inflation for instance spiked to 3.5 percent in September year-on-year, not least due to an increase in value-added tax at the beginning of the month. Germany for its part only logged a 2.1-percent rise compared with the same month last year.

The European Central Bank has an annual target of 2.0 percent inflation to ensure fiscal stability, but the rate has been above that ceiling for 22 months now, adding pressure to ECB to take counter-measures. So far, though, the Frankfurt-based bank has chosen to keep interest rates low in order to foster growth.

The ECB recently raised its 2012 eurozone inflation forecast to 2.5 percent, but was confident the rate could be lowered to 1.9 percent in 2013.

hg/mz (Reuters, AFP, dpa)