Euro-area’s inflation accelerates in October

Bloomberg

Euro-area inflation accelerated in October and underlying price pressures increased, complicating policy makers’ choices after the economy grew at its weakest pace since 2014. Consumer prices jumped 2.2 percent from a year earlier while a measure that strips out volatile components rose to 1.1 percent.
Inflation has been stronger than the European Central Bank’s goal of just below 2 percent for the past five months, although energy has contributed a significant part to the pickup. President Mario Draghi has expressed confidence that a robust labor market and growing wages will also lift core prices, justifying a gradual withdrawal of monetary stimulus.
“The acceleration of euro-area inflation in October provides little reason for excitement. The headline figure was lifted by energy costs and the core print by legislative changes in Italy. Neither of those have much to do with
the underlying state of the economy. The ECB will have to keep waiting for signs of the ‘vigorous pick-up’ recently alluded to by President Mario Draghi,” said economists David Powell and Jamie Murray, Bloomberg Economics.
Yet while the inflation outlook in the 19-nation bloc is firming, prospects for the economy have deteriorated. Growth ground to a halt in Germany and Italy, two of the region’s three largest economies, and weaker sentiment indicators don’t point to a strong rebound. Risks remain prominent as
well with Italy’s budget crisis dragging on and a hard Brexit becoming more likely.