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UK Inflation Rose Slightly, ZEW Economic Sentiment Rose

David Meyer - Author

Aug. 17 2016, Published 8:11 a.m. ET

Eurozone trade balance rose

The trade balance in the Eurozone rose by 14.9% on an annual basis in June to 29.2 billion euros—compared to expectations of 25.8 billion euros. While exports fell by 2.2% in June, imports fell by 5%. Looking at the Eurozone (EZU) (FEZ) member nations, exports grew in Germany, remained unchanged in Italy, and weakened in France. Due to sluggish demand overseas, exports weakened in the Netherlands and Belgium as well.

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ZEW economic sentiment increases for Germany and the Eurozone

The ZEW economic sentiment index for Germany (EWG) (HEWG) rose to 0.5 in August from -6.8 in the previous month. It was below estimated forecasts of 2.0. The reading was higher as the economy recovered from the Brexit vote even though political problems remain in the area. The ZEW economic sentiment index for the Eurozone rose to 4.6 in August from -14.7 in the previous month.

Inflation level rose 0.5% in the United Kingdom

The inflation rate in the United Kingdom (EWU) rose to 0.6% on an annual basis in July—compared to expectations of a 0.5% rise and growth of 0.5% in the previous month. However, the inflation rate remains below the central bank’s target of 2%. On a monthly basis, consumer prices fell by 0.1% in July. This is in line with expectations, but lower than the 0.2% rise the previous month.

A rise in transportation combined with an increase in the cost of alcohol, hotels, and restaurants contributed to the growth in inflation. The fall in the value of the pound versus the US dollar is expected to boost inflation levels in the United Kingdom. An upward movement in consumer prices can be expected in the coming months.


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