Inflation, Unemployment: A Double Whammy for the EU

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In a double whammy for Europe, newly released data indicate that inflation is rising, while the unemployment rate remains above 11%.

The eurozone's annual rate of inflation is expected to be 2.6% in August 2012, according to a preliminary estimate from
Eurostat, the statistical office of the European Union. That would be up from 2.4% in July. Economists had forecast a rate of 2.5%.

"For the euro area in particular, inflation expectations have remained very well anchored following the non-standard liquidity provision measures undertaken by the ECB," said a European Central Bank Executive Board member on Thursday. He also indicated that inflation expectations are low because economic activity is forecast to remain lackluster, and the ECB will mop up any excess liquidity in the banking system should it threaten to boost inflation.

In a separate report, Eurostat said that the unemployment rate in the eurozone stood at 11.3% in July. That was unchanged from an upwardly revised reading in June, as well as in line with forecasts.

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