Estimated Rise in Inflation Sends Euro Higher
THE TAKEAWAY: Euro-zone inflation estimate for September at 2.7% -> Inflation likely due to a rise in energy prices -> Euro trading slightly higher
Euro-zone annual inflation surprisingly climbed higher in September and set a new 6-month high according to an initial Eurostat estimate. The Consumer Price Index for September was estimated to be 2.7% higher than September 2011, beating expectations for inflation to fall to 2.4% from August’s 2.6% inflation rate.
Energy was estimated to be the biggest contributor to inflation, as prices rose 9.2% from September of last year, more than August’s 8.9% rise in energy prices. Food, alcohol, and tobacco prices rose 2.9% annually, and industrial goods prices only rose 0.8%.
The higher inflation is surprising when taken in the context of a suffering Euro-zone economy, as the Euro-zone economy was estimated to have contracted 0.2% in 2Q, and the inflation is therefore likely caused by a rise in energy prices. A higher inflation suggests that the European Central Bank is less likely to cut interest rates in their next meeting, and could therefore be Euro positive.
EURUSD 15-minute: September 28, 2012
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