Brussels (Reuters) - inflation in area Euro rose above the target of the European Central Bank in April, further increasing the chances of an increase in interest rates in June, despite a weakening of economic sentiment and household demand.
Inflation in 17 countries, with the euro increased by 2.8% on the year of this month of 2.7% in a month earlier, the highest level since October 2010, while it was 3.2%.
Consensus expectations had been for a flat reading from March before the meeting of the Central Bank European of Thursday next on interest rates.
"I cannot imagine that some market participants expect the increase in rates by the European Central Bank at an earlier date." We expected in June, the market is still waiting for July. "I guess that the consensus will now pass to June," said Piet Lammens, Economist at KBC.
The ECB raised its main interest rate from the bottom Records from 1.0 to 1.25% in April, concerned about the impact on the consumer prices of energy and food costs rising.
Other data this month suggested growth in the two Germany and the euro area is in peak periods and figures of the Spain, the largest savings under the threat of Europe debt crisisshowed growing unemployment and sinking of retail.
A monthly survey of the European Commission showed economic sentiment in the euro area as a whole fell for the second month in a row in April 106.2, 107.3 in March and the expectations of the market of a decline below 107.0.
"The inquiry of the European Commission data indicates clearly that the combination of the price high oil, a strong euro and the monetary and fiscal tightening started the economic mood in the eurozone, the tooth," said Martin van Vlietan economist at ING.
The decline of sentiment was in all sectors of the economy except construction, with optimism falling consumer most of-11.6 of-10.6 in March.
NO LOAN BOOST
ECB data also show that the annual growth rate of loans to the private sector in the euro zone slowed in March, bucking expectations for an increase, but the growth of the M3 money supply accelerated.
"Monetary data still point to a modest recovery in the eurozone of money and loan growth,", said Christoph Balz, an economist at Commerzbank.
"While the data itself indicate no risk to the stability of prices which require further monetary tightening, they are further evidence that the economic situation has changed considerably since 2009 - and that is why the ECB believes that extremely low interest rates are most appropriate."
More evidence of the weakening of household demand could be seen in the retail sales data.
Germany sales fell in March, defying expectations of a rise as consumers buy fewer groceries and textiles a month, when inflation has exceeded the 2% threshold.
Adjusted for consumer price increases, sales decreased by 2.1 per cent the month and 3.5% on the year.
The decline in consumer demand was more pronounced in the "device" of the euro area that seeks to regain the confidence of the markets in their public finances with difficult austerity measures.
In Spain sales fell 8.6% year after year in March and in Greece the decline was 10.6% in February.
Euro area consumer inflation expectations, which have increased rapidly since November 2010, edged slightly lower 30.8 30.7. Sale of expectations of prices between manufacturers, on the rise since August 2010, fell more significantly to 21.5 of 24.4.
Flag the European Commission, which points to the phase of the economic cycle, also fell for the second month in a row, 1.28 points of 1.43 in March.
"Despite this, the current level of the indicator remains near historical peaks, suggesting that the recovery of the industry will continue in the coming months,"the Commission said.""
Eurostat data also show that unemployment in the eurozone held steady at 9.9% of the population active in March.
(Additional reporting by the offices of Madrid, Berlin, Frankfurt and Athens; editing by Rex Merrifield and Patrick Graham)
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