Eurozone inflation makes rate hike likely
New economic data from the Eurozone has made it more likely than ever that the European Central Bank will raise interest rates when it meets June 8. The new data comes from several sources and shows that inflation is up, unemployment is down, and retail sales are up. The only real negative data is that consumer spending in Germany is still held back by real wages that are not growing or are actually down.
Inflation in the Eurozone was up to 2.5 percent in the most recent figures available after being at 2.4 percent in the previous reading. This figure, taking in the entire region, was released by Eurostat, the EU’s statistical office, and is at its highest since October 2005. Core inflation, excluding the prices for food and oil, also shows signs of rising. The 1.6 percent rate in April is, however, still considered within reasonable limits and some economists have put indications that it is on the rise to one-time factors.
Elsewhere, both Germany and France have said that unemployment in their nations is down. In France, the unemployment rate is reported to be 9.0 percent, its lowest level in three and a half years. In Germany, unemployment was down to 11 percent in May. That left 4.596 million people out of work in German, but was the smallest percentage of the working population out of a job since December 2004.
In Germany, retail sales were up by 2.8 percent in April after having dropped by 1.7 percent in March, according to that nation’s federal statistics office. Even so, the combined figures for both months show sales still down by 0.8 percent as spending by consumers is limited by a lack of growth in real wages.
Still, the total economic picture in the Eurozone has most analysts expecting that the ECB will raise interest rates by at least a quarter of a percentage point when it meets next.