According to inflation data released by the European statistics office Eurostat, euro zone annual consumer prices ticked up higher than expected in September to 3.0 percent.
Euro zone CPI data follows Germany’s higher inflation data from yesterday, which could pressure the European Central Bank to stay away from cutting interest rates at their monetary policy meeting next week. There was speculation recently that the central bank was going to cut rates in order to support the weakening European economy as the region’s debt crisis saps business confidence and raises the spectre of another recession.
As euro zone manufacturing growth has been slowing down in recent months, the ECB has hinted in its meeting in early September that it is open to rate cuts and has halted a cycle of interest rate rises begun five months ago. .
ECB President Jean-Claude Trichet said then there were “intensified downside risks” for the euro zone’s economy and the bank expects inflation to be below 2 percent in 2012.
The euro fell 20 pips after the release of the data but has since remained supported at 1.3514. Better than expected unemployment data released t the same time helped buoy the euro.