Ouch: Eurozone inflation misses expectations as unemployment sticks at five-year low

Emma Haslett
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Dark clouds overhead: Eurozone inflation disappointed in August (Source: Getty)

We're not angry, we're just disappointed.

Eurozone inflation stayed decidedly flat in August, rising just 0.2 per cent during the month - missing expectations of a rise to 0.3 per cent.

It's a mark of quite how quiet the City is that it had almost no effect on the euro, which held steady at $1.1147 following the news, an underwhelming 0.04 per cent higher.

Meanwhile, unemployment also missed expectations, sticking at 10.1 per cent, compared with analysts' forecasts of 10 per cent. That said, the figure is a five-year low - so not exactly bad news.

Still, the weaker-than-expected consumer prices index could mean the European Central Bank is forced to make yet another move: it has already dangled the possibility of action at its August meeting.

Minutes from the meeting read: "In the current environment ... future discussions were called for regarding wage trends, inflation expectations, the medium-term orientation of monetary policy and the time horizon over which a very accommodative monetary policy stance would remain warranted."

“Today’s tepid inflation figures aren’t going to give ECB president Mario Draghi too much encouragement and he knows that there are plenty of dark clouds overhead," said Dennis de Jong, managing director of UFX.com.

“Uncertainty over the relationship between the United Kingdom and Europe is not going to go away anytime soon, and could yet prove a major drag on growth across the continent.

“However, it may well be the Italian banking crisis that causes Draghi the biggest headache, as observers nervously wait to see its impact on the wider Eurozone.”