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Euro zone March inflation up less than expected y/y

Published 04/16/2010, 05:04 AM
Updated 04/16/2010, 05:08 AM

MADRID, April 16 (Reuters) - Euro zone consumer prices grew less than expected year-on-year in March, data showed on Friday, with energy costs the main driver behind the increase.

The European Union's statistics office, Eurostat, said consumer prices in the 16-country currency area rose 0.9 percent month-on-month and 1.4 percent year-on-year.

Economists polled by Reuters had on average expected a 0.9 percent monthly rise and a 1.5 percent year-on-year increase, the initial estimate issued about two weeks ago by Eurostat.

Energy prices jumped 2.6 percent month-on-month for a 7.2 percent annual increase.

What the European Central Bank calls core inflation, which excludes volatile energy and unprocessed food prices, was 0.7 percent month-on-month and 0.9 percent year-on-year, roughly in line with market expectations.

The ECB, which wants to keep annual inflation just below 2 percent over the medium term, keenly watches core inflation to see how energy and food price shocks affect wider price growth.

Eurostat also said the euro zone swung into an unexpected trade surplus of 2.6 billion euros ($3.6 billion) in February from a downwardly revised 9 billion euro deficit in January, thanks to a 10 percent year-on-year jump in exports and only a 6 percent rise in imports, not adjusted for seasonal swings.

Economists polled by Reuters had expected an unadjusted trade deficit of 1 billion euros for February.

Adjusted for seasonality, the surplus in February was even higher -- 3.3 billion euros, up from 1.9 billion in January -- as exports rose 2.7 percent on the month and imports gained only 1.5 percent.

The sharp rise in exports points to a rebound in global demand for euro zone goods. The increase in imports also shows there is more domestic demand, which could bode well for prospects ofeconomic recovery. (Reporting by Jan Strupczewski, editing by Dale Hudson)

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