Eurozone Inflation Rises to Twenty Month High
The inflation rate of the Eurozone has risen this month to 1.7 per cent - the highest since late November. It is up from 1.4 per cent in June.
The rise can be partly blamed on value added tax increases which have been initiated in southern European countries. The unemployment rate has stabilized at 10 per cent across the region. Although combined with the inflation rate, the European Central Bank is still expected not to raise interest rates, affecting personal loans, remortgages and so on. The ECB is not expected to raise interest rates until well into 2011. It’s goal also is to keep inflation around a 2 per cent level. Unemployment continued to rise in Spain and France into June. Spain’s unemployment rate, just under 21 per cent, is the highest in the European Union. Germany’s recent improvements though, have helped bring down the number of "jobless" overall. ECB policymakers are meeting on Tuesday. Growth rates in the Eurozone are expected to be ahead of schedule and be showing strong expansion. This is being pushed hard by the growth spent in Germany. This could encourage the ECB to move ahead with unwinding the exceptional measures taken at the height of the economic crisis. Julian Callow, European economist at Barclay’s Capital warned, "A progressively intensifying fiscal tightening across Europe could hinder growth. There is quite a significant headwind here."