Eurozone Future Inflation Gauge Slips
Reuters
6-June-2008
(Reuters) - LONDON - Euro zone inflation pressures edged down in April suggesting that inflation will dip in coming months but remain high, a report by the New York-based Economic Cycle Research Institute showed on Friday.
The Eurozone Inflation Gauge, which aims to predict future trends in the region's inflation, fell to 108.9 in April from March's near eight-year high of 110.1.
The report said German inflation pressures stayed high in April but fell slightly from March, pulled down by disinflationary moves in measures of employment, interest rates, money supply, loans and orders.
Inflation pressures in France, Italy and Spain also edged down on the back of a fall in input prices.
"Despite its latest downtick, Euro zone inflation remains near a 16-year high," ECRI said in the report. "Meanwhile, the EZFIG remains close to March's multi-year high, indicating that Euro zone inflation pressures are still fairly strong."
The European Central Bank upgraded its staff inflation projections for 2008 and 2009 on Thursday, saying they saw it averaging around 3.4 percent this year, and 2.9 percent in 2009.
This is well above the bank's 2.0 percent ceiling and the ECB may raise interest rates next month after signalling that was possible at its press conference on Thursday.
Surging oil and food prices could see inflation rise again while most economists forecast it to average around 3.1 percent in 2008.