BBC NEWS Americas Africa Europe Middle East South Asia Asia Pacific
BBCi NEWS   SPORT   WEATHER   WORLD SERVICE   A-Z INDEX     

BBC News World Edition
 You are in: Business  
News Front Page
Africa
Americas
Asia-Pacific
Europe
Middle East
South Asia
UK
Business
E-Commerce
Economy
Market Data
Entertainment
Science/Nature
Technology
Health
-------------
Talking Point
-------------
Country Profiles
In Depth
-------------
Programmes
-------------
BBC Sport
BBC Weather
SERVICES
-------------
EDITIONS
Wednesday, 16 May, 2001, 13:41 GMT 14:41 UK
Eurozone inflation climbs
A stork flying high with the euro
European prices are flying higher
Eurozone inflation rose sharper than analysts had predicted during April to 2.9%.

This was an increase from 2.6% in March, according to figures released less than a week after the European Central Bank (ECB) cut interest rates by a quarter percent.

Eurozone inflation

April (actual): 2.9%
April (predicted): 2.8%
March: 2.6%

Source: Eurostat
At the time, the ECB president Wim Duisenberg said the rate cut was the result of lower inflationary pressure and a fall in consumer credit growth.

Following the release of the latest inflation figures, Bundesbank president Ernst Welteke, who is also an ECB official, insisted the rate cut had been the right decision since it was based on predictions of lower prices ahead.

Mr Duisenberg predicted that eurozone inflation will fall to below 2% in 2002.

No surprise

Analysts do not believe the April headline inflation figures will have come as a shock to the ECB.

"Temporary factors have boosted prices," said SEB Merchant Bank chief strategist Theis Knutsen.

"The main upward pressure has come from food and energy, which are more volatile," said BNP Paribas chief eurozone economist Ken Wattret.

Rising prices in April (March in brackets)

Food price inflation:
4.8% (4.4%)
Energy price inflation:
7.8% (5.6%)

Source: Eurostat
"The ECB will have had a very good idea about the degree of acceleration in these numbers when they made their decision to cut official interest rates last week," said UBS Warburg's Edward Teather.

"The ECB's mandate is to focus on medium-term inflation and as long as they perceive the current development to be of a temporary nature it is entirely correct to ease rates," said Mr Knutsen.

Mr Teather predicted that inflation will soon fall back again, and that this would pave the way for another quarter percent cut by the ECB in July.

Click below for background and analysis on Europe's single currency

Key Issues

FACT FILES

INTERACTIVE QUIZ
See also:

10 May 01 | Business
11 May 01 | Business
11 May 01 | Business
07 May 01 | Business
Internet links:


The BBC is not responsible for the content of external internet sites

Links to more Business stories are at the foot of the page.


E-mail this story to a friend

Links to more Business stories

© BBC ^^ Back to top

News Front Page | Africa | Americas | Asia-Pacific | Europe | Middle East |
South Asia | UK | Business | Entertainment | Science/Nature |
Technology | Health | Talking Point | Country Profiles | In Depth |
Programmes