BRUSSELS: More expensive energy drove euro zone inflation higher year-on-year in May as expected despite cheaper food, data showed on Wednesday, June 16, as wage growth in the first quarter accelerated from the previous three months.
Consumer prices in the 16-country area rose 0.1% month-on-month (m-o-m) and 1.6% year-on-year (y-o-y), European Union statistics office Eurostat said. That was in line with market expectations and up from a 1.5% annual increase in April.
Fuels for transport added 0.71 percentage point to the y-o-y result and heating oil added 0.23 percentage point. Overall food prices fell 0.2% y-o-y, while prices of alcohol and tobacco jumped 4.4% y-o-y.
What the European Central Bank calls core inflation, which does not include volatile prices for energy and unprocessed food, was 0.1% m-o-m and 0.9% y-o-y.
The ECB wants to keep inflation just below 2% over the medium term and watches the core number to gauge underlying inflationary pressures.
Economists expect the bank to keep interest rates, now at a record low of 1%, on hold until 2011.
Separately, Eurostat said nominal hourly labour costs, adjusted for the number of working days, rose 2.1% y-o-y in the first quarter of 2010 after a 1.7% gain in the last three months of 2009.
Of the total, wages grew by 2.0% y-o-y after a 1.6% expansion in the previous quarter and non-wage labour costs rose 2.1%, up from 2%.
Wage growth in Germany, known for its cost restraint, was 1% in the January-March period after a 0.3% y-o-y fall in the previous three months.
Among countries whose competitiveness is under market scrutiny, Spain's wage growth continued at a brisk pace.
Data for the first quarter in Greece was not yet available, but wages there grew by 4.1% y-o-y in the last quarter of 2009. In Spain, first-quarter wages rose 2.7% in annual terms.
In Portugal, wages froze in the first quarter after a 3.1% rise in the fourth quarter of 2009. ' Reuters
Consumer prices in the 16-country area rose 0.1% month-on-month (m-o-m) and 1.6% year-on-year (y-o-y), European Union statistics office Eurostat said. That was in line with market expectations and up from a 1.5% annual increase in April.
Fuels for transport added 0.71 percentage point to the y-o-y result and heating oil added 0.23 percentage point. Overall food prices fell 0.2% y-o-y, while prices of alcohol and tobacco jumped 4.4% y-o-y.
What the European Central Bank calls core inflation, which does not include volatile prices for energy and unprocessed food, was 0.1% m-o-m and 0.9% y-o-y.
The ECB wants to keep inflation just below 2% over the medium term and watches the core number to gauge underlying inflationary pressures.
Economists expect the bank to keep interest rates, now at a record low of 1%, on hold until 2011.
Separately, Eurostat said nominal hourly labour costs, adjusted for the number of working days, rose 2.1% y-o-y in the first quarter of 2010 after a 1.7% gain in the last three months of 2009.
Of the total, wages grew by 2.0% y-o-y after a 1.6% expansion in the previous quarter and non-wage labour costs rose 2.1%, up from 2%.
Wage growth in Germany, known for its cost restraint, was 1% in the January-March period after a 0.3% y-o-y fall in the previous three months.
Among countries whose competitiveness is under market scrutiny, Spain's wage growth continued at a brisk pace.
Data for the first quarter in Greece was not yet available, but wages there grew by 4.1% y-o-y in the last quarter of 2009. In Spain, first-quarter wages rose 2.7% in annual terms.
In Portugal, wages froze in the first quarter after a 3.1% rise in the fourth quarter of 2009. ' Reuters
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