Feeding the European Central Bank (ECB) dilemma on whether to stick to the quantitive easing (QE) programme, inflation in the Eurozone accelerated in May, according to a flash estimate released on May 31 by Eurostat.
According to the EU’s statistics agency, the consumer price index within the Eurozone rose to 1.9% year-on-year, up from 1.2% in April and far above the expectations of 1.6%. The main factor to blame at this moment would be the recent spike observed in oil prices. Energy prices were up 6.1% on the year to May, more than double April’s 2.6%.
Underlying inflation rose to an annual rate of 1.1% from 0.7% in April.
As the ECB targets inflation of close to but just below 2% for the 19 Eurozone states, the bank’s president, Mario Draghi, faces a choice between delivering on the ECB’s plan to put an end to quantitive easing, or to contain the current unrest in markets caused both by the spike in oil prices and the tense political situation in his home country of Italy.
Germany, the EU’s largest economy, and Spain both hit 2.2% inflation on May 30. As the ECB wanted to put an end to the QE by the end of 2018, the slowdown of growth in the Eurozone and the fact that Italy will not enjoy political stability until the end of the year puts the plan into question.
Unemployment dips slightly
Eurostat also revealed that the unemployment rate in the euro area ticked down to 8.5% in April from an upwardly revised 8.6% in the previous month. According to the data made available, this 8.5% is the lowest rate recorded in the euro area since December 2008. For the 28 EU Member States, the unemployment rate stood at 7.1% in April, which was stable compared with March, and down significantly from 7.8% a year ago, as well as being at its lowest since September 2008.
Among the Member States, the lowest unemployment rates in April were recorded in the Czech Republic (2.2%), Malta (3.0%), and Germany (3.4%). Greece continues to be dogged by a sky-high unemployment rate of 20.8% with Spain at 15.9% in second. Compared with a year ago, the unemployment rate fell in every single EU Member State except troubled Italy, where it remained stable, and in hi-tech powerhouse Estonia, where it increased from 5.3% to 5.6% between March 2017 and March 2018.
Cyprus showed the sharpest decrease in its unemployment numbers, dropping from 11.7% to 8.6%, with Croatia following the trend having dropped from 11.5% to 9.1%, and Portugal from 9.5% to 7.4%.
In April 2018, the unemployment rate in the United States was 3.9%, down from 4.1% in March 2018 and from 4.4% in April 2017.
The number of unemployed people in the EU28 and under the age of 25 reached 3.426 million in April, with 2.433 million living in the Eurozone. Youth unemployment decreased by 464,000 in the EU28 and by 306,000 in the countries that use the single currency, with the lowest rates being seen in Germany (6.0%), Malta (6.8%), and the Netherlands (6.9%). The highest rates, once again, were registered in Greece (45.4%), Spain (34.4%), and Italy (33.1%).