Belfast Telegraph

Inflation in eurozone edges up to 1.5% but is still half the UK's rate

By Colm Kelpie

Annual inflation in the eurozone edged up by 1.5% last month - up just fractionally from October's figure of 1.4%.

The figure remains off the target of just under 2% set by the European Central Bank (ECB), but it is up considerably on the same time last year.

In November 2016, inflation rose by only 0.6%.

The lowest annual rates were registered in Cyprus (0.2%), Ireland (0.5%) and Finland (0.9%).

The highest annual rates were recorded in Estonia (4.5%), Lithuania (4.2%) and the United Kingdom (3.1%), where the Brexit-induced weak pound was having an effect. Compared with October, annual inflation fell in four member states, remained stable in nine and rose in 15.

The data from Eurostat - Europe's version of the Office for National Statistics (ONS) - confirmed an earlier flash estimate, which missed expectations.

Economists had been expecting inflation to increase by 1.6%.

Areas that had the largest impact on the inflation rate included fuels for transport, which was up 0.21%, heating oil, up 0.07% and cheese and eggs, which rose 0.05%.

Last week, the European Central Bank raised its growth and inflation forecasts as the bloc's recovery becomes increasingly broad-based. But it sees inflation falling short of target into 2020 as high unemployment keeps a lid on wages.

The Frankfurt-based central bank - which targets inflation at just below 2% - sees price growth slowly accelerating over the coming years and hitting 1.7% in 2020.

To revive growth, the ECB has used its entire arsenal.

It has cut rates into negative territory, given banks nearly unlimited access to cheap funding, and bought over €2trn worth of bonds to depress borrowing costs. While the economy is in recovery mode, inflation has remained stubborn.

The UK manufacturing industry has kept order book levels near a 30-year high thanks to strong demand for motor vehicles and transport equipment.

Total order books in the three months to December were in line with the month before when it hit the highest rate since August 1988, according to the CBI industrial trends survey.

While 14 of the 17 areas of manufacturing enjoyed "above normal" order book rates, export orders eased back slightly from the 20-year highs seen in the three months to November.

Anna Leach, the CBI's head of economic intelligence, said: "As we head towards the end of 2017, UK manufacturers' total order books remain at a near-30 (year) high."

Meanwhile, a survey by CBI has said half of UK firms expect to recruit staff next year, with smaller firms most confident, according to a new study.

A survey of almost 300 companies, employing one million workers, also found that most people believed that a diverse workforce was important to their future success.

The CBI said its research found that a shortage of skilled workers was the biggest worry for companies, with many worried about being able to attract overseas employees.

Belfast Telegraph

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