1 May 2015
Eurozone deflation threat still active – Capital Economics
FXStreet (Barcelona) - Reviewing the Eurozone CPI and unemployment data release, Jonathan Loynes of Capital Economics argues that it is too early to call that the deflation threat has subsided, and further expresses concerns over wages.
Key Quotes
“The rise in euro-zone annual consumer price inflation from March’s -0.1% to 0.0% in April was caused by a further slight fading of negative energy effects and a pick-up in food inflation. Hence it is too early to conclude that the threat of deflation has lifted altogether.”
“Meanwhile, the unemployment rate stuck at 11.3% for the third successive month in March. While the trend in unemployment still appears to be downwards, it is too slow to prompt any meaningful pick-up in wage pressures in the foreseeable future.”
Key Quotes
“The rise in euro-zone annual consumer price inflation from March’s -0.1% to 0.0% in April was caused by a further slight fading of negative energy effects and a pick-up in food inflation. Hence it is too early to conclude that the threat of deflation has lifted altogether.”
“Meanwhile, the unemployment rate stuck at 11.3% for the third successive month in March. While the trend in unemployment still appears to be downwards, it is too slow to prompt any meaningful pick-up in wage pressures in the foreseeable future.”