October 31, 2018 / 10:09 AM / a month ago

Euro zone inflation rises as expected, core measure up more

BRUSSELS, Oct 31 (Reuters) - Euro zone consumer prices rose as expected in October, while the core inflation measure which excludes volatile components rose more than predicted, supporting the European Central Bank’s decision to end its bond buying programme at year-end.

The European Union’s statistics office Eurostat estimated on Wednesday that consumer prices in the 19 countries sharing the euro rose 2.2 percent year-on-year this month after a 2.1 percent increase in September and a 2.0 percent gain in August.

The European Central Bank (ECB) wants to keep price growth below, but close to 2 percent over the medium term.

Because inflation has long been well below that target, the bank has been buying government bonds on the secondary market to inject more cash into the banking system to fuel credit and faster price growth.

But now that inflation has accelerated, the bank plans to end the programme at the end of the year and the October data appeared to support that decision.

Eurostat said energy prices jumped 10.6 percent year-on-year in October while unprocessed food was 2.1 percent more expensive.

Excluding these two volatile components, in what the ECB calls core inflation and watches in policy decisions, prices rose 1.3 percent year on year this month, accelerating from 1.1 percent in September and beating market expectations of a 1.2 percent rise.

An even narrower core inflation measure watched by many market participants, which excludes also alcohol and tobacco prices, increased 1.1 percent year-on-year, up from 0.9 percent in September and more than the expected 1.0 percent.

Separately, Eurostat said euro zone unemployment in September was flat at 8.1 percent of the workforce with 13.153 million people without jobs, marginally up from 13.151 million in August. (Reporting By Jan Strupczewski)

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