Reinforcing expectations that the European Central Bank would cut key interest rate in November, Eurozone inflation slowed in October. At the same time, official data showed that the jobless rate remained stable in September.
Friday, a flash report from the Eurostat showed that Eurozone annual inflation slowed to 3.2% in October from 3.6% in September, matching economists' expectations. The statistical office is scheduled to release the final data on November 14.
Christoph Weil, an analyst at Commerzbank, said inflation should retreat further to below 2% by next spring, giving the ECB leeway to proceed with rapid rate cuts.
Earlier in October, ECB President Jean-Claude Trichet had signaled that the ECB is prepared to cut interest rates for second month in November, assuming that upcoming data on inflation indicates a further alleviation of the upside risks to price stability.
The analyst said the decline is due largely to energy prices, as their rapid rise in the autumn of 2007 is now disappearing gradually from the year-on-year comparison.
Further, the analyst said today's figures confirm that inflation has passed its peak and is expected to have fallen back below 2% by next spring, given the oil price do not pick up. The Commerzbank said it expects consumer prices to rise at an average pace of 1.8% next year, compared with an estimated 3.4% for this year.
Separately, the statistical office said the jobless rate in the 15-nation economy stood at 7.5% in September, stable compared with August. A year ago, the unemployment rate was 7.3%. The jobless rate came in line with economists' expectations.
Compared with August, the number of unemployed persons increased 52,000 in September and rose 507,000 from the prior year. Among the member states, the lowest unemployment rates were recorded in the Netherlands and Denmark and the highest in Spain and Slovakia.
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