BRUSSELS: Core inflation in the Euro zone remained at the four-year low level -- 1.5 per cent year-on-year -- according to data released by European Union's statistical office, Eurostat.
The organisation said consumer prices in the 12 countries using the euro rose 0.3 per cent month-on-month in October.
Analysts reacted to the news saying the static inflation level countered attempts by some in European Central Bank for an increase in the interest rate.
The inflation figure, however, excludes prices of unprocessed food and energy.
Eurostat also confirmed its earlier annual estimate of overall inflation at 2.5 per cent in October against 2.6 per cent recorded in September.
There has been widespread demand from business leaders, politicians and trade unions in the Euro countries not to raise the interest rates.
Many economists, however, have been expecting the ECB to raise the rates from current historic lows of 2 per cent by 25 basis points, probably from 1 December. If it happens, it will be the first in five years. The governing council of the bank is expected to meet in two weeks.
Some of the governing council members have been wanting to make credit more expensive before high energy prices can cause demands for higher wages and price rises in other sectors. The central bank wants to keep the consumer price growth below, but close to 2 per cent.
Eurostat said the inflation was boosted by monthly price increases in Spain, Italy, Greece and Luxembourg. In Germany and France, however, the index remained flat.
Energy prices increased 0.2 percent on a monthly basis in October for a year-on-year gain of 12.2 percent.
ECB president Jean-Claude Trichet had warned in early November that an interest rate rise is possible "at any time". In tune with the mood of the hawks in the bank, council member and Bank of France governor Christian Noyer had said prevention is always better than cure.
Meanwhile, German finance minister-designate Peer Steinbrueck has urged the bank to keep interest rates at the existing level to nurture economic growth.
Other EU finance ministers had said 8 November that inflation remains absent outside energy prices and called on the bank to hold off raising its benchmark rate from 2 per cent.
Posted
on : Thu, 17 Nov 2005 20:20 GMT | Mortgages News
By : Rob Davis
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