Italian industrial output has notched up its biggest gain in over a year, but in another warning sign for the ECB, consumer prices have slipped again - this time in Spain. David Pollard reports.
The euro zone on the up - if prices going down. At least in Spain, where consumer prices fell last month for the first time since May. Down 0.4 per cent year on year. As elsewhere, oil was a factor - but so too a slip in transport and housing costs. There was good news from Italy - its industrial output rose by 1.1 per cent in July. That was its biggest gain in over a year. The price data - though: it puts deflation back on the radar for the ECB. Does it need to take more action? CMC's Jasper Lawler. (SOUNDBITE) (English) CMC MARKETS ANALYST, JASPER LAWLER, SAYING: ''The inflation would suggest it probably does. It's failing so far to create inflation. But to some extent the deflation is out of its hands - it's largely because of the drop in oil prices.'' But: central banks and monetary policy can't solve the world's economic problems alone. On the day when Europe's stock markets were heading for their best weekly gain in eight, that caution came from German finance minister, Wolfgang Schaeuble. With an extra warning. (SOUNDBITE) (English) GERMAN FINANCE MINISTER WOLFGANG SCHAEUBLE SAYING: "If you look what's going on on the global level with increasing - public and private - an increasing liquidity in financial markets, it's by sure that we are moving to the next bubble." A view that might put him at odds with ECB board member Benoit Coeure. With an apparent nod to a possible extension of the central bank's QE bond-buying programme, he's warning that growth in the euro zone is still too weak.