The euro zone's October inflation rate was unexpectedly revised down to a three-month low of 2 per cent from an early estimate of 2.1 per cent, Eurostat data showed yesterday.
A smaller-than-expected monthly rise of 0.1 per cent in consumer prices saw the inflation rate subside from September's rate of 2.2 per cent to the European Central Bank's (ECB) tolerance. Eurostat suggested the revision to the annual rate might be because the impact of an increase in French cigarette taxes seen last month had been overestimated, and that the effects of the tax hike could feed through in November's data. Analysts said the data showed there was no need for the ECB to raise interest rates soon.
"These figures are pretty benign, and given that we are only just out of recession in Germany and the euro is strong, this is a case for the ECB to sit on its hands until mid-2004," said Mr David Brown, chief economist at Bear Stearns in London.
The revision flew in the face of consensus forecasts, which had been looking for October consumer prices to rise by 0.3 per cent from the previous month and for the annual inflation rate to remain unrevised at 2.1 percent. The measure of core prices referred to by the ECB, which excludes volatile energy and unprocessed food costs, rose 0.2 per cent on a monthly basis and by 2 per cent from a year earlier.
This compared with economists' expectations that core prices would post a monthly increase of 0.2 per cent and an annual one of 1.8 per cent.
A breakdown showed persistent divergences between national inflation rates, ranging from the Republic's 3.3 per cent to Finland's 0.9 per cent.
Euro-zone October energy prices fell 0.4 per cent from the previous month and rose 0.7 per cent from a year earlier. The year-on-year change was less than half the 1.6 per cent rate of increase reported for September.
In the US the consumer price index, the most widely used gauge of inflation, was unchanged in October, the Labor Department said. The so-called core index, which strips out sometimes volatile food and energy prices, rose 0.2 per cent. - (Reuters)
