Eurozone data to confirm inflation upturn on rising oil prices
British finance minister Gordon Brown (R) with Mervyn King, governor of the Bank of England. Eurozone indicators to be released this week will confirm that inflation ticked up again in June as a result of the latest rise in oil prices, while sterling markets will also have a raft of British economic news to chew over.(AFP/File)
Eurozone data to confirm inflation upturn on rising oil prices Sun Jul 10, 4:42 AM ET
BRUSSELS (AFP) - Eurozone indicators to be released this week will confirm that inflation ticked up again in June as a result of the latest rise in oil prices, while sterling markets will also have a raft of British economic news to chew over, analysts said.
Data will also highlight contrasting fortunes for industry in France and Italy, with French output growing and Italian output contracting in May.
Final June inflation data for Germany, Italy and Spain are all expected to be in line with provisional figures, while France is expected to report an acceleration in inflation from May.
Taken together, the figures will suggest that Eurostat's provisional estimate that eurozone inflation rebounded to 2.1 percent in June from 1.9 percent will be confirmed when final data are released on July 18, economists said.
"We expect the week's inflation data to remain consistent with a final euro zone HICP inflation rate of 2.1 percent, in line with the flash estimate," said James Ashley and Nick Matthews of Barclays Capital.
Higher energy prices are likely to push French inflation up in June, with economists expecting the consumer price index measure to accelerate to 1.7 percent from 1.5 percent.
"The rise in oil prices and the fall of the euro should more than reverse last month's fall in the energy component of the French CPI," said Neville Hill and Matthias Klein of CSFB.
Meanwhile, French industrial output is expected to rebound in May after an energy-related drop in April.
But for Italy, output is likely to weaken again, after a 1.9 percent month-on-month rise in April, which followed a lengthy period of contraction.
In London, Tuesday's news on June inflation is expected to show the annual consumer price index to rise by 1.9 percent for the fourth month running, just shy of the Bank of England's 2.0 percent target.
But the month-on-month rate is expected to be unchanged, down on the 0.4 percent recorded in May.
Even if the CPI rises above target, analysts doubt the rate-setting Monetary Policy Committee will be too concerned especially as its quarterly economic projections in May factored in for a spike above target in the short-term.
"The Bank will pay more heed to the prospects for inflation particularly if official GDP revisions spark a significant change in the MPC's own forecasts as we expect," said David Page, economist at Investec Securities.
On Wednesday, official earnings and employment data take centre stage in London and analysts expect wage pressures in particular to have eased.
The headline rate of average earnings is expected to moderate to 4.3 percent in the three months to May from the previous year from the 4.6 percent rate recorded in April, largely because February's bonus payments fall out of the equation.
Following last month's widespread revisions to GDP in recent times, growth forecasts for the British economy have been revised downwards dramatically.
Royal Bank of Scotland analyst Geoff Dicks is now expecting the British economy to grow by only 2.0 percent this year, which, with 2002, would be the weakest year since the recovery began in 1992.
"This week's bomb attacks put the risks to that forecast to the downside and make the 25 basis point rate cut that we were already predicting in August that much more likely," he said.
Monday's monthly house price survey is expected to confirm the housing market slowdown taking place, while the British Chambers of Commerce quarterly economic survey on Thursday is set to show diminishing economic confidence in both the manufacturing and services sectors.
Elsewhere, Monday's May trade data is expected to show the deficit holding steady, with exports stabilising following recent monthly falls, while producer price data on the same day are set to show price pressures in the supply chain easing.
Market Data 
Markets 
AI
