Restaurants, rents push euro zone inflation up in September

October 17, 2016 5:13 AM EDT

People sit at tables outside a bistro in Paris, France, November 18, 2015. REUTERS/Gonzalo Fuentes

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BRUSSELS (Reuters) - Higher prices in restaurants and cafes as well as rents and cigarette prices pushed up euro zone inflation in September, data showed on Monday, offsetting the downward pull on the index from cheap fuel and gas prices.

The European Union's statistics office Eurostat confirmed that consumer prices in the 19 countries using the euro rose 0.4 percent month-on-month for a 0.4 percent year-on-year gain, as expected by markets and in line with initial Eurostat estimates.

The statistics agency said price rises in restaurants and cafes added 0.08 points to the overall annual result and more expensive rents and tobacco 0.05 points each.

Food, alcohol and tobacco prices rose 0.7 percent year-on-year in September, with unprocessed food itself 1.1 percent more expensive than 12 months earlier.

Energy prices, despite rising 1.0 percent from August, were still 3.0 percent lower than a year earlier. Their annual drop is much milder than in August, when energy prices fell 5.6 percent, reflecting mounting oil prices.

Without the volatile energy and unprocessed food items, or what the European Central Bank calls core inflation, euro zone prices rose 0.4 percent on the month for a 0.8 percent year-on-year gain -- remaining steady for the fifth month running.

The ECB wants to keep inflation at below, but close to 2 percent over the medium term.

To boost inflation levels closer to its target, the bank is buying 80 billion euros worth of government bonds each month on the secondary market to inject more cash into banking system and force banks to lend more to the real economy to boost economic growth rates and therefore inflation.

(Reporting By Jan Strupczewski; Editing by Francesco Guarascio)

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