Euro zone inflation slowed for a second month in September, led by falling energy prices, and remained below the European Central Bank’s 2% ceiling for an eighth month.
Consumer prices rose an annual 1.1% after a 1.3% increase in August, the European Union’s statistics office in Luxembourg said in a preliminary estimate today.
The core inflation rate, which excludes volatile food and energy costs, was 1%. The ECB forecasts that inflation will average 1.5% this year and 1.3% in 2014.
ECB President Mario Draghi reaffirmed his pledge last week to keep key interest rates low for an extended period of time “based on a subdued outlook for inflation” and “broad-based weakness” in the economy.
The ECB is forecast to hold its benchmark rate at a record low 0.5% on October 2.
Energy prices in the euro area fell 0.9% after a 0.3% decline in August, today’s report showed. The cost of food, alcohol and tobacco increased 2.6% after a 3.2% gain a month earlier.
Inflation in Germany, Europe’s largest economy, was unchanged at 1.6% in September, data last week showed. The Bundesbank said last week that slowing inflation is helping to support an “extraordinarily good” consumer climate in Germany.
Euro zone economic confidence increased more than economists forecast this month to the most in two years. An index of services rose to the highest since June 2011, signaling a strengthening recovery.
Economists have forecast euro-area economic growth of 0.2% this quarter and next after 0.3% expansion in the three months to June.