Wednesday 16 October 2013 4:56 am

UK overtakes Estonia with highest EU inflation in September

Eurozone inflation increased in September as the consumer price index rose to 0.5 per cent from August's 0.1 per cent, in line with expectations.

Year-on-year, September saw an expected 1.1 per cent rise – broadly stable after August 2012 to August 2013's 1.3 per cent increase and the lowest level since February 2010.

(Eurostat)

In the wider European Union, the UK saw the highest increase in September, at 2.7 per cent. Bulgaria and Greece saw the lowest annual rates, with decreases of 1.3 per cent and 1.0 per cent respectively. Estonia was at 2.6 per cent, the Netherlands at 2.4 per cent.

Compared with August, annual inflation fell in seventeen member states, remained stable in eight and rose in three. Greece had the lowest 12-month average (-0.2 per cent) and Romania the highest (4.1 per cent).

Tobacco provided the biggest upward impact to Eurozone annual inflation adding 0.10 percentage points. Electricity came second (+0.09) and accommodation services (+0.08) third. The largest downward impacts came from fuels for transport (-0.30), telecommunications (-0.15) and medical & paramedical services (-0.07).

(Eurostat)

Howard Archer of IHS Global Insight says on the 1.1 per cent inflation:

This is welcome news for Eurozone consumers as it helps their purchasing power and it also means that the ECB can at the very least maintain its extremely accomodative policy for an extended period and actually has ample scope to take further stimulative action if it feels the need.

September’s drop in consumer price inflation was largely due to lower energy prices year-on-year while there was also an appreciable moderation in food price inflation. Furthermore, already muted core Eurozone inflation edged lower.