LONDON (AFX) - Euro zone economic figures to be released this week are expected to show inflationary pressures easing in the wake of the global downturn and a continuing weakness in industrial activity, economists said.
They said that if inflation data confirm benign price pressures, this will open the door for rate cuts from the European Central Bank. The key figures this week will be German Ifo business climate index, the euro zone inflation data, and euro zone industrial production data.
Euro zone inflation is expected to have risen in September by around 0.2 pct on the month, but with the yearly rate falling to 2.4 pct from 2.7 pct in August, mainly as a result of base effects. Economists said however, that core inflation is currently quite resilient.
"Inflation in the Eurozone is set to fall further. A positive trend that has already been anticipated by the ECB and the markets," John Shepperd, an economist at Dresdner Kleinwort Wasserstein, said. "Much of the decline will be due to beneficial base effects as large energy-related increases in the price indices a year ago drop out of the annual rate calculation. That certainly applies to the September data," he added.
Euro zone industrial production is expected to have risen in August by around 0.95 pct on the month, with the yearly rate recording a small uptick to 0.3 pct from declines the previous month, boosted by strong German data.
"Euro zone industrial production data is expected to benefit from the surprisingly strong German reading with ex-construction up 2.1 pct on the month," Jeremy Hawkins, chief economist Europe at Bank of America said.
"Since July, the Bundesbank's ex-construction output data is used to calculate euro zone industrial production," he added. He said the timid improvement recorded during the summer months, will be overtaken by the collapse in confidence that followed the September 11 event.
"Hence, the positive August reading should not be overemphasised," Hawkins said.
The German Ifo index is expected to have fallen in September to 88.4 pct from 89.5 in August. This reading will be particularly important as Economists expect the full impact of the September 11 attacks to be included for the first time.
Economists' forecasts for euro zone indicators due Oct 15-19

AFX CONSENSUS PREVIOUS
MONDAY OCT 15
Italy Aug industrial output
month-on-month (pct) +0.8 -0.7

year-on-year (pct) -1.3 -2.1

German Sept WPI
month-on-month (pct) -0.1 -0.3
year-on-year (pct) -0.4 +1.5

TUESDAY OCT 16
France Aug industrial output
month-on-month (pct) -0.2 +0.3
year-on-year (pct) +1.1 +2.0

France Aug manufacturing output
month-on-month (pct) -0.4 +0.3
year-on-year (pct) +0.8 +2.3

Italy Sept final CPI
month-on-month (pct) 0.0 0.0
year-on-year (pct) +2.6 +2.6

WEDNESDAY OCT 17
Euro Sept HICP
month-on-month (pct) +0.2 0.0
year-on-year (pct) +2.4 +2.7

Euro zone Aug industrial production
month-on-month (pct) +0.95 -1.4
year-on-year (pct) +0.3 -1.1

THURSDAY OCT 18
nothing scheduled

FRIDAY OCT 19
German Sept IFO business climate index 88.4 89.5

German Oct CPI
month-on-month (pct) -0.3 0.0
year-on-year (pct) -0.3 +2.1

German Sept PPI
month-on-month (pct) n/a -0.1
year-on-year (pct) +1.9 +2.7