Spanish national consumer prices rose 0.1 percent year-on-year in June, compared to a 0.2 percent fall in May. As David Pollard reports, it's welcome news for the euro zone as Greece continues to weigh on the region's recovery.
A numbers puzzle for Europe's central bankers. First, Spanish consumer price inflation. It's languished in negative territory for nearly a year. But last month edged upwards 0.1 percent. Just enough to add hope that the deflation fear stalking Europe is vanquished. Says CIBC's Jeremy Stretch. (SOUNDBITE) (English) CIBC, HEAD OF FX STRATEGY, JEREMY STRETCH, SAYING: ''What we have seen is that we've past the trough in the inflation cycle, albeit going back to the oil price, if you were to see the oil price subside aggressively, then that could stoke up further disinflationary pressures. But I think we've most likely past the trough.'' Industrial production, though: that's lagging. Across the euro zone, slipping 0.4 per cent in May, the third drop in a row. Germany's ZEW barometer of investor sentiment has also eased back. A reading of 29.7 against 31.5 for June, though the drop isn't as bad as forecast. And for the ECB, a small niggle compared to Greece. Mario Draghi holds his latest policy-setting meeting on Thursday. (SOUNDBITE) (English) CIBC, HEAD OF FX STRATEGY, JEREMY STRETCH, SAYING: ''Ultimately he should be reasonably relaxed with the underlying dynamics. We haven't seen significant degrees of contagion, even amidst the worst of the Grexit fears, and that's probably a testament to the policy backdrop provided by the ECB via the bond purchase and the prospect of those bond purchases being amplified, should it be necessary.'' UK rate-setters have their data dilemma. Inflation fell towards its lowest rate in half a century in June. A 0% reading - with fierce high-street price competition in clothing and food seen as the main driver. The hawks, though, may still be hungry for a hike. (SOUNDBITE) (English) CIBC, HEAD OF FX STRATEGY, JEREMY STRETCH, SAYING: ''I suspect the more hawkish members of the Bank of England will be talking about the capacity constraints, will be talking about higher average earnings and the impact that has through the price chain over the medium term and that's going to be the defining factor in terms of UK monetary policy.'' And with British wages picking up in recent months, data this week is expected to show the highest rise in average earnings since 2009.