The price of oil has increased inflation in the European Union

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Eurostat data on inflation for September is a great sensation market are presented. Thus, inflation in the Eurozone in September has coincided with market expectations, increased in September at an annual rate of 2.1%. The September growth in consumer prices, thus fully comply with the August. However, core inflation in September rose at an annual rate of only 0.9%, as in August, and the forecasts of market consensus did not materialize (analysts expected growth on 1%). Recall that the rate of core consumer price inflation does not take into account the growth of prices for energy and food products, including alcoholic beverages.
Thus, the main driver of growth, the September inflation in the Eurozone became energy prices. And this is not surprising, since in the Euro area in September, gasoline and other fuels rose at an annual rate of 9.5% due to rising oil prices. “Champions” Euro zone inflation in September were Spain and Germany. Consumer prices in September, there rose 2.3% and 2.2% yoy respectively, while several other developed countries in the Eurozone, including Italy and France, the rate of inflation in September slowed down.
In principle, inflation in August and September due to higher prices of fuel as close to the target inflation of ECB, beyond which could be followed by raising interest rates. A further increase in oil prices will lead to a corresponding increase in energy prices and other consumer prices in the Eurozone.
If the end of the year, this trend will continue, in early 2019, the European Central Bank may again consider the question of raising interest rates, but it is not the fact that monetary policy in the Euro area in the near future will change drastically. The market has not reacted to the published statistics, the focus of his attention is still concern about the newly emerging debt problems of Italy. In today’s trading the Euro depreciates against the dollar by 0.37% and trading at $1,15301.
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Natalia Milchakova,
The Deputy Director of analytical Department,
Alpari