EU inflation down despite higher prices for fuel and housing

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Europe Union inflation dropped 0.2% to 2.7% in April, according to the latest figures from Eurostat, the EU’s official statistics agency.

Figures for the Eurozone countries showed inflation was slightly lower than the rest of the EU – an average 2.6%, down 0.1% from March.

Rising prices for transport (Up 4.3%), housing (Up 3.9%) and alcohol and tobacco (Up 4.9%) were the main drivers behind inflation.

The lowest annual rates were in Sweden (1.0%), Greece (1.5%), Ireland and Romania (both 1.9%), while the highest were in Hungary (5.6%), Estonia (4.3%), the Czech Republic and Poland (both 4.0%).

Compared with March 2012, annual inflation fell in 16 EU countries and and increased in 10.

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Year-on-year inflation rates were lowest in Sweden (1.2%), Ireland (1.5%) and Slovenia (2.2%), with the highest in Estonia (4.8%), Hungary (4.4%) and Slovakia (4.2%).

Inflation in popular expat destinations was 2.4% in France (down 0.2%), 2% in Spain (Up 0.9%) and 3.6% in Cyprus (Up 0.1%).

Inflation in the UK was 3.5%, but the Bank of England fears that whatever economic policies are put in place to increase growth and reduce the cost of living will fail unless the eurozone countries successfully tackle their debt problems.

“The possibility that the substantial challenges within the euro area will lead to significant economic and financial disruption continues to pose the greatest threat to the UK recovery,” said the Bank of England inflation report.

“Even if a credible and effective set of policies is successfully implemented, the scale of the necessary

adjustments suggests that a prolonged period of sluggish growth and heightened uncertainty is likely. A failure to implement such policies could have severe implications for the UK economy.”

Economic and political turmoil in Greece has taken the focus from elsewhere in Europe, like the growing financial problems in Spain and Cyprus.

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