Slower eurozone inflation confirmed

Eurozone inflation slowed as expected in August, data confirmed on Wednesday, thanks to an easing of fuel prices from July and less expensive food. The European Union's statistics office Eurostat said consumer prices in the 16 countries using the euro rose 0.2 percent month-on-month for a 1.6 percent year-on-year increase, as expected by economists polled by Reuters.
Eurostat said food prices fell 0.2 percent on the month in August to rise 1.1 percent year-on-year. Energy prices fell 0.1 percent month-on-month but were still 6.1 percent higher than a year earlier. Without the volatile unprocessed food and energy prices, or what the European Central bank calls core inflation, prices grew 0.3 percent against July for a 1.0 percent annual increase - the same as in July.
The ECB wants to keep headline consumer inflation below, but close to 2 percent over the medium term and watches the core inflation measures for signs of inflationary pressures. Eurostat said separately that the number of people employed held stable in the second quarter of 2010 at about 144.4 million people, compared with the previous three months, but it fell by 0.6 percent against the same period of 2009.
In the first quarter of the year, employment was also flat on the quarterly basis and declined 1.2 percent on the year. The data confirmed the job market was slow to react to recovery from the worst economic crisis in decades, putting a question mark over any rebound of consumer demand and auguring badly for any substantial acceleration of economic growth.
The eurozone's unemployment was near the 12-year high of 10 percent in July for the fifth-month running. The eurozone's gross domestic product grew by 1.0 percent in the second quarter compared to the first three months of the year. Eurostat said employment rose in the financial sector - by 0.6 percent on the quarter - and on public administration, health and education, by 0.2 percent. It declined on all other sectors - by 0.5 percent quarter-on-quarter in manufacturing, 0.3 percent in construction, 0.2 percent in trade, transport and communications and 0.9 percent agriculture.
The steepest drops were registered in Greece and Spain, at 0.9 percent and 0.2 percent on the quarter. The two countries have been hit hard by the crisis, with Greece undergoing a severe austerity programme after years of overspending. In Germany, the eurozone's biggest economy and an engine of recovery in the eurozone, employment rose 0.2 percent.