BRUSSELS: Euro zone inflation accelerated in September as energy costs soared but core prices rose at their slowest pace for a year, likely leaving the European Central Bank on track to cut interest rates soon.
Consumer prices in the 17 countries sharing the euro rose 2.7 percent year-on-year, the European Union's statistics office Eurostat said yesterday in a first estimate that marked a rise from 2.6 percent in August.
Markets had expected inflation to ease to 2.5 percent.
Energy prices jumped 9.2 percent after a 8.9 percent rise the previous month. But core inflation, excluding both energy and unprocessed foods, fell to 1.7 percent, its lowest level in a year.
Together with recent data indicating that the euro zone economy entered a recession in the third quarter, yesterday's inflation reading kept intact expectations that the ECB will not wait long before delivering a growth-boosting rate cut.
"It seems highly likely that the ECB will take interest rates down from 0.75 percent to 0.50 percent in the fourth quarter," said Howard Archer, economist at IHS Global Insight.
"While the ECB could act as soon as its October meeting next Thursday, we lean toward the view that they will probably hold off to November."
Just 14 of 73 economists polled by Reuters this week expect the ECB to cut rates when it meets next Thursday but a majority expect the bank to have lopped off 25 basis points by the end of the year.
The ECB kept its main interest rate unchanged at a record low of 0.75 percent at its meeting earlier this month, taking another policy-easing route by agreeing to launch a new and potentially unlimited bond-buying program.
Inflation fell steadily from 3 percent in November 2011 to stabilize at 2.4 percent in May, June and July, as the euro zone economy slowed sharply as a result of the sovereign debt crisis.
But it rose again for the first time in 11 months in August due to higher fuel and transport costs.
The ECB's target is to keep inflation below, but close to 2 percent, a rate it is not expected to drop back to for some time, though price pressures should ease further as the economy continues to struggle.
"Euro zone inflation should resume its downward trend before long as previous sharp increases in energy and food prices cease to boost the annual rate," said Martin Van Vliet, economist at ING bank.
"But with commodity prices remaining high and volatile, and further VAT hikes in the pipeline (e.g. in the Netherlands next month and in Finland in January), it is probably going to be a very gradual descent," he said.
Headline inflation might stay above 2 percent well into next year.
"The bottom line, however, is that underlying inflation pressures remain muted in most parts of the euro zone economy. This gives the ECB scope to ease monetary policy further," he said.
In September, Eurostat for the first time provided year-on-year prices changes in the index's components — food, tobacco, energy and non-energy industrial goods and services.
It publishes a more detailed breakdown for September as well as monthly inflation figures on Oct. 16.
Soaring energy costs fuel euro zone inflation
Soaring energy costs fuel euro zone inflation
Saudi Arabia’s cultural sector is a new economic engine between Riyadh and Paris, says ambassador
RIYADH: Culture has become a fundamental pillar in bilateral relations between France and Saudi Arabia, according to the French Ambassador to the Kingdom, Patrick Maisonnave.
Maisonnave noted its connection to the entertainment and tourism sectors, which makes it a new engine for economic cooperation between Riyadh and Paris.
He told Al-Eqtisadiah during the opening ceremony of La Fabrique in the Jax district of Diriyah that cultural cooperation with Saudi Arabia is an important element for its attractiveness in the coming decades.
La Fabrique is a space dedicated to artistic creativity and cultural exchange, launched as part of a partnership between the Riyadh Art program and the French Institute in Riyadh.
Running from Jan. 22 until Feb 14, the initiative will provide an open workspace that allows artists to develop and work on their ideas within a collaborative framework.
Launching La Fabrique as a space dedicated to artistic creativity
The ambassador highlighted that the transformation journey in the Kingdom under Vision 2030 has contributed to the emergence of a new generation of young artists and creators, alongside a growing desire in Saudi society to connect with culture and to embrace what is happening globally.
He affirmed that the relationship between the two countries is “profound, even cultural par excellence,” with interest from the Saudi side in French culture, matched by increasing interest from the French public and cultural institutions unfolding in the Kingdom.
Latest estimates indicate that the culture-based economy represents about 2.3 percent of France’s gross domestic product, equivalent to more than 90 billion euros ($106.4 billion) in annual revenues, according to government data. The sector directly employs more than 600,000 people, making it one of the largest job-creating sectors in the fields of creativity, publishing, cinema, and visual arts.
Saudi Arabia benefiting from French experience in the cultural field
Maisonnave explained that France possesses established cultural institutions, while Saudi Arabia is building a strong cultural sector, which opens the door for cooperation opportunities.
This comes as an extension of the signing of 10 major cultural agreements a year ago between French and Saudi institutions, aiming to enhance cooperation and transfer French expertise and knowledge to contribute to the development of the cultural system in the Kingdom.
He added that experiences like La Fabrique provide an opportunity to meet the new generation of Saudi creators, who have expressed interest in connecting with French institutions and artists in Paris and France.
La Fabrique encompasses a space for multiple contemporary artistic practices, including performance arts, digital and interactive arts, photography, music, and cinema, while providing the public with an opportunity to witness the stages of producing artistic works and interact with the creative process.
