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Euro zone Sept inflation falls to 3.6% yr/yr

  Inflation in the euro zone fell to 3.6% year-on-year in September as expected, a first estimate showed on Tuesday, but remained almost double the European Central Bank’s target.


The rise in consumer prices in the 15-country area slowed from August’s 3.8% annual growth and a peak of 4.0% in July, the European Union statistics office said.

The Eurostat estimate does not include a month-on-month figure or a detailed breakdown of inflation components, which will be made available on Oct. 15.

The ECB wants inflation to be just below 2% over the medium term, but soaring oil and food prices have kept the gauge well above its target since September 2007.

Seeking to anchor inflation expectations and prevent a wage-price spiral, the ECB raised euro zone interest rates by 25 basis points to 4.25% in July.

On Monday, European Commission data showed inflation expectations peaked with oil prices in July and have been falling sharply since then. Economists expect that this, along with a slowing euro zone economy and financial market turmoil, will pave the way for an ECB interest rate cut early in 2009. (Reuters)