Eurozone inflation rate lifts to highest level in nearly six years
Eurozone inflation has risen to its fastest rate in nearly six years led by rising energy prices.
The EU's statistics office, Eurostat, said the bloc's inflation rate was expected to be 2.2 per cent in October – above the European Central Bank's (ECB) target of just under two per cent.
The euro fell to its lowest level since August against the dollar as the year-on-year inflation rate sped up from the 2.1 per cent in September.
The inflation rate matched the 2.2 per cent reached in December 2012.
Energy prices were 10.6 per cent higher compared with 9.5 per cent the previous month, largely due to a surge in oil prices.
The core inflation rate – which excludes volatile markets such as energy, food, alcohol and tobacco – rose to 1.1 per cent from 0.9 per cent in September.
On Tuesday Eurostat said GDP growth for the bloc's 19 countries rose just 0.2 per cent in the third quarter, its slowest pace in more than four years, hampered by Italy's economy stalling.
The slow growth and issues with Italy's budget, which the EU is set to reject, led to investors fearing the Eurozone could break up – the Sentix Euro Break-up Index rising to its highest level in more than two years.
“Rising eurozone inflation is doing little to help the euro this morning, hitting its lowest level since August,” Joshua Mahony, analyst at IG said.
“With the ECB winding down their asset purchases by the end of the year, markets want to know when we will see rates rise in the eurozone.”
Last week the ECB decided to leave interest rates unchanged at a monetary policy meeting in Frankfurt.
ECB President Mario Draghi said recent economic data showed a “weaker momentum rather than a downturn” and was not enough to implement policy changes.
Analysts said the GDP growth figures coupled with the inflation rate rise “complicated” the choices of the ECB.
The eurozone's central bank also said it would buy €15bn of bonds a month through to the end of December before bringing its net purchases as part of its asset purchase programme to an end.