Eurozone inflation drops, but so does confidence 02/05/2008 00:00

The promising news of a fall in inflation in April is dampened by a drop of 2.5 points in the public’s confidence of the economy.

2 May 2008

BRUSSELS - Inflation in the euro area dropped slightly in April, but so did its citizens' confidence in the economy, data released on Wednesday showed.

According to preliminary estimates released by the European statistics institute Eurostat, annual inflation in the 15-member eurozone fell from its highest-ever recorded level of 3.6 percent in March to 3.3 percent in April.

While still distant from the European Central Bank's target rate of 2 percent, the latest inflation figure was bound to nurture EU hopes that after surging on the back of rising oil and food prices, the consumer price index may be moving past its peak.

On Monday, the European Commission said eurozone inflation should start easing in the second half of the year to produce an average rate for 2008 of 3.2 percent. Inflation for 2009 is forecast at 2.2 percent.

"If confirmed, the (April inflation figure) is a good sign," said Amelia Torres, spokeswoman for EU Economic and Monetary Affairs Commissioner Joaquin Almunia.

While other economic data released on Wednesday showed eurozone unemployment stable at 7.1 percent in March, there was less good news from the area's business and consumer confidence indicators.

The euro area Business Climate Indicator dropped again in April, from 0.79 to 0.44, after a slight rebound in March, while the Economic Sentiment Indicator (ESI), which includes consumer confidence, fell by 2.5 points to 97.1 over the same period.

The April ESI drop more than offset the rebound registered in March, EU officials said.

The 15 members of the eurozone are: Belgium, Germany, Ireland, Greece, Spain, France, Italy, Cyprus, Luxembourg, Malta, The Netherlands, Austria, Portugal, Slovenia and Finland.

[dpa / Expatica]