The eurozone’s inflation just rose to 0.4%, from 0.3%.
Unemployment stayed flat at an eye-watering 11.5%.
On inflation, analysts were expecting the slight climb to 0.4%. That might be a signal that Europe isn’t heading into a deflationary spiral, but the figure is still far below the European Central Bank’s 2% target, and it is likely to be very low for a long time.
And it’s not all good news on inflation: The eurozone’s measure of core inflation, which strips out the most volatile prices in the index, is still falling. It’s down to 0.7% from 0.8% in September. That’s the joint-lowest level in the currency union’s history.
So while it has some room to breathe, the ECB isn’t off the hook yet. Capital Economics’ Jennifer McKeown explains in a note:
The combination of falling production costs and weak demand could certainly see this rate fall even further in the coming months. Meanwhile, with other data today confirming that the eurozone unemployment rate held at 11.5%, there is no inflationary pressure coming from the labour market. In all, while the ECB feels that governments must play a bigger role in strengthening demand, the central bank will remain under pressure to do more to tackle the threat of deflation.
Analysts weren’t expecting a change in the unemployment figure. It has slowly declined from 12% earlier this year. However, Italian unemployment figures just out showed an unexpected spike
to 12.5% from 12.3%.
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