Euro Mixed as Euro-zone Inflation Data Reflects Stagnation in Price Growth

The euro lagged against the British pound and Japanese yen on Tuesday after Eurostat confirmed their initial estimates showing that that the annual rate of CPI growth stagnated during May as energy prices remain down sharply from a year ago. Meanwhile, core CPI (which excludes volatile food and energy costs) slipped to an annual rate of 1.5 percent from 1.8 percent. All told, it is fairly clear that any downward price pressures in the Euro-zone are primarily the result of weaker commodity prices. The data isn’t likely to cause too much concern amongst European Central Bank officials, though, as they have already stated that they anticipate that CPI growth will “decline further and temporarily remain negative over the coming months, before returning to positive territory by the end of 2009.”
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