According to the first estimate, euro zone CPI inflation stayed unchanged at 2.5% Y/Y in August, in line with expectations. Inflation remains well above the ECB’s target of close but just below 2.0%, but will probably ease further in the coming months as economic growth slowed sharply and due to base effects from last years’ increase in food and oil prices. No breakdown is yet available but lower prices for food and energy were probably offset by an increase in the core reading, after core CPI dropped sharply in July.
In July, the euro zone unemployment rate stayed unchanged at 10.0%, while the figures of May and June were upwardly revised from 9.90% to 10%. Compared to June, the number of people unemployed rose by 61 000 in the euro area and by 18 000 in the EU. The euro area unemployment rate is still down from its peak of 10.2% reached last year, but the details show that labour market conditions are weakening again with the number of people unemployed picking up, both in the euro zone and EU as the recovery is losing steam. Also in the coming months, unemployment could increase further as the EMU economy slowed sharply in the second quarter and the outlook for the coming months is bleak.