German retail sales were even stronger than expected in August and euro zone inflation shows signs of perking up. Good news for the ECB; Japan's central bankers, though, are confronted with another set of inflation data going the wrong way. Kate King reports.
It's a case of a bag half full in Germany, where consumers appear to propping up an otherwise weakening economy. August retail figures show a rise of 3.7 percent on the same time last year - but were down more than expected in month on month data. Economic sentiment throughout euro-using countries also showing positive signs. A rebound of consumer confidence saw the sentiment index jump from 103.5 to 104.9 in September. And euro zone inflation ticking up by 0.4 per cent - twice as fast as August. That's good news for European Central Bank President Mario Draghi, but also for his critics. Though all of them might have a new challenge looming: Deutsche Bank. (SOUNDBITE) INDEPENDENT MARKET ANALYST, JEREMY BATSTONE-CARR SAYING: "The German economy does look to be on a slowing trend ... Bear in mind that whilst all the issues swirl in relation to Deutsche Bank ... the European banking sector as a whole continues to suffer from insufficient capital and im afraid to say there is very little the ECB can do about that." Japan's government also appears to be hamstrung. Data showing inflation went backwards in August - with consumer prices falling 0.5 percent from a year earlier, the largest drop since March 2013, (SOUNDBITE) INDEPENDENT MARKET ANALYST, JEREMY BATSTONE-CARR SAYING: "In Japan's case is that policy setting doesn't seem to be making any difference at all and of course why would it if the problem is that Japan needs more people than monetary or fiscal policy stimulus. Underlying deflationary pressures remain extremely robust or strong." Unlike Germany, Japanese consumers aren't cooperating. Household spending sank 4.6 percent in the year to August, almost twice the fall expected by analysts.