Eurozone inflation rises to 2.8%

29 April 2011 Last updated at 12:25 High energy prices have contributed to the increase in the rate of inflation The eurozone's inflation rate edged up to to 2.8% in April from March's figure of 2.7%, according to official data from Eurostat.

The increase takes inflation further away from the European Central Bank's target of just below 2%.

The cost of raw materials and high energy prices have contributed to the increase.

The ECB started raising rates in April from their record low, with a quarter point increase to 1.25%.

The rise in the inflation rate will put pressure on the ECB to raise interest rates further.

"It's slightly higher than consensus but that wasn't a complete surprise. We saw from Germany and Spain, which already published numbers, that it could go this way," said Piet Lammens, economist at KBC.

"However, I can imagine that some market participants will expect the rate increase by the European Central Bank at an earlier date. We expected June, the market is still expecting July. I guess the consensus will now move to June," he added.

However, policymakers at the ECB will also be keenly aware of the austerity measures in countries such as Greece, the Irish Republic and Portugal.

If rates in such countries were to rise, on top of the austerity measures being implemented, the return to growth for the eurozone as a whole might be threatened.

View the original article here

This post was made using the Auto Blogging Software from WebMagnates.org This line will not appear when posts are made after activating the software to full version.

Producer price inflation picks up

8 April 2011 Last updated at 10:39 GMT The rising cost of petroleum goods was the biggest contributor to producer price inflation in March The rising prices of manufactured goods unexpectedly accelerated in March to the highest rate since October 2008, figures show.

Producer price inflation hit 5.4%, up from 5.3% in February, the Office for National Statistics (ONS) said.

Markets had been expecting a fall to 5.1%, and the news caused a brief jump in the value of sterling.

The rise will renew pressure on the Bank of England to raise interest rates.

The Monetary Policy Committee chose to hold off for the 25th month in a row on Thursday.

'Collective groan'

A large part of rise in producer prices was due to accelerating prices of food, drinks, tobacco and petroleum, which are typically more volatile than other producer prices, according to the ONS.

The oil price was the biggest factor driving prices higher in the past month.

"The Bank of England's Monetary Policy Committee will no doubt issue a collective groan at the sight of these numbers," said Chris Williamson of research firm Markit Economics.

Continue reading the main story It heightens the Bank's dilemma, as the accelerating producer prices may lead to higher consumer price rises.

"Worse may be yet to come," says Mr Williamson. "Oil prices have since hit a record high in sterling terms, and supply chain disruptions from the Japanese earthquake could also drive up prices for certain highly sought-after components."

Input costs

The cost of petroleum products rose 17.9% in the year to last month, by far the fastest component of the index.

In contrast, the cost of computers and transport equipment rose only 0.7% and 0.4% respectively.

Meanwhile, the cost of inputs - materials and fuel - rose by 14.6% in March compared with a year earlier.

This was down from the 14.9% rate registered in February, which was the highest level since 2008.

But with input price inflation continuing at such an elevated level, it will put increasing pressure on manufacturers' profit margins.

View the original article here

This post was made using the Auto Blogging Software from WebMagnates.org This line will not appear when posts are made after activating the software to full version.