(Kitco News) - The latest Eurozone CPI reading will not do anything to take thepressure off ECB President Lagarde and her colleagues. The reading came inat 4.1% year on year vs analyst expectations of 3.7% (prev 3.4%).
Looking into the report, energy is expected to have thehighest annual rate in October (23.5%, compared with 17.6% in September),followed by services (2.1%, compared with 1.7% in September), non-energyindustrial goods (2.0%, compared with 2.1% in September) and food, alcohol& tobacco (2.0%, stable compared with September).
In terms of geographics, Lithuania suffered the most with theannual inflation rate rising 8.2%. Month on month Belgium recorded the highestrate with an increase of 1.8%.
Prior to the reading Lloyds bank noted "That is well abovethe European Central Bank"s 2.0% target. At yesterday"s ECB policy updatePresident Lagarde, while admitting that the rise inflation was greater thanexpected, still asserted it was likely to be temporary. We do expect "core"inflation to be unchanged at 1.9%, which might provide some solace to the ECB.Nevertheless, with inflation possibly set to rise further before its nextpolicy meeting in mid-December the Governing Council"s unity in maintaining a"dovish" policy stance seems set to be tested."
Elsewhere we also got the latest GDP reading. GDP increased by2.2% in the euro area and by 2.1% in the EU. Some of the biggest economies inEurope helped the increase as Austria (+3.3%) recorded the highestincrease compared to the previous quarter, followed by France (+3.0%) andPortugal (+2.9%).
By Rajan DhallFor Kitco News
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