Euro Area annual inflation remained unchanged at 2.5%

The Euro Area CPI  remained unchanged at an annual rate of 2.5% during August 2011.

Among the Euro Area countries with the highest inflation rates were Estonia (5.6%), Latvia (4.6%), and UK (4.5%).

The lowest inflation rates were recorded in Ireland (1.0%), Slovenia (1.2%) and Greece (1.4%).

The two biggest economies in Europe: Germany and France recorded an annual inflation rate of 2.5% (down from 2.6% in July) and 2.4% (up from 2.1% in July), respectively.

Among the major components that contributed to the CPI to remain high were transport (5.6%) and housing (4.9%).

This news in the Euro Area inflation, while the US CPI was reported today to have inclined during August by 0.4%, might be among the reasons for the incline in the Euro against major currencies including the US dollar.

This news will also likely to affect ECB rate decision to be made at the beginning of October. The current inflation rate is still higher than the ECB target inflation rate of 2%, but is lower than the inflation rate from the beginning of the year (see chart below).

As seen in the chart below, the decline in the inflation might be due, in part, to Euro basic interest rate hikes during 2011.

CPI EURO AREA 2008-2011 (Y-2-Y) & Basic Interest Rate of ECB September 15

Euro Area employment grew by 0.3% in August

The number of employed personal grew in August by 0.3% in the Euro Area and by 0.2% in the EU27. The sector that led the charge was the financial services and business activities that inclined by 0.9% during the month. This news may also give another push to the Euro currency to strengthen against the USD.

Euros to USD is currently traded up by 0.1512% to 1.3776 as of 13:59*.

Current gold price, short term futures (October 2011 delivery) is traded at $1,789.90 per t oz. a 2.00% decrease or as of 13:44*.

Current silver price, short term futures (October 2011 delivery) is traded at $40.005 per t oz. a 1.30% decrease or as of 13:44*.

(* GMT)


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Lior Cohen, M.A. commodities analyst and blogger at Trading NRG.