The Strategist

EU Economy in September: Unemployment is Flatlining yet Consumer Prices are Going Down

09/30/2015 - 16:41

Consumer prices in the euro area in September 2015 decreased by 0.1% compared to September last year, said Eurostat.

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The deflation in the euro area has been recorded for the first time since March 2015.

In August, inflation stood at 0.1% in annual terms.

Analysts surveyed by Bloomberg, on average, forecasted zero inflation in September.

The main components of inflation in September in the euro area - food, alcohol/tobacco (price increase by 1.4% compared to 1.3% in August), services (1.3% in September and 1.2% in August) , non-energy production (0.3% and 0.4%) and energy (-8.9% and - 7.2%).

- The resumption of easing inflation, apparently, has become a temporary failure due to oil prices. In the absence of significant inflationary pressures, the ECB is likely to intensify discussion of additional monetary stimulus, - an economist at Natixis in Frankfurt Johannes Gareis said to Bloomberd.

In Spain, the deflation in September was 1.2% in annual terms, in Germany, the decline in consumer prices was renewed for the first time in 8 months and amounted to 0.2%.

As a result of the September meeting, the ECB recently downgraded the outlook for consumer prices: in the euro area, inflation is expected at 0.1% in 2015, in 2016, estimated growth has been reduced from 1.5% to 1.1%, in 2017 - from 1.8% to 1.7%.

At the same time, unemployment in the 19 countries of the euro zone in August 2015 was 11% - just like in July. This is the minimum to March 2012.

The unemployment rate for July, revised up from the previously announced level of 10.9% to 11%.

Analysts, surveyed by Bloomberg, have not expected any changes in unemployment in August compared to July's first estimate.

Unemployment in the EU (28 countries) was 9.5% in August 2015 and did not change in July 2015.

Eurostat considers that unemployment in August 2015 was 23.022 million men and women in the EU-28, 17.603 million of which are resting in the euro area (EU-19).
Estonia experienced the largest decrease in unemployment (from 8.0% to 5.7% in the period from July 2014 to July 2015); decrease was marked in Slovakia (from 13.2% to 11.1%), Spain (with 24.2% to 22.2%), Bulgaria (from 11.4% to 9.7%), Ireland (from 11.1% to 9.5%) and Poland (from 8.7% to 7, 2%).

The increase in unemployment was registered in Austria (from 5.6% to 5.7%), Belgium (8.6% to 8.8%), France (from 10.4% to 10.8%) and Finland (8 8% to 9.7%).