Record employment figures for Germany, according to new data, but still virtually no price demand in the euro zone as a whole sharpen the twin horns of Mario Draghi's policy dilemma ahead of next week's ECB meeting. David Pollard reports.
On the face of it - plenty to cheer the ECB as it prepares for its next policy meeting. New data shows German unemployment fell more than expected in August. The jobless rate in Europe's biggest economy at a record low. Retail sales there rose by more than expected in July. But drill down further, and there's plenty for ECB chief Mario Draghi to worry about. A total absence of inflation in Italy for example - or yet another big slide in Greek retail sales. (SOUNDBITE) (English) WILSON KING INVESTMENT MANAGEMENT, HEAD OF RESEARCH, RICHARD HUNTER, SAYING: "Germany's position within the EU is one which is attracting more and more scrutiny on the basis that the euro zone as a whole is running at so many different speeds in so many different pockets. There is an element of course that Germany could be pulled down with the rest of the area." And even Germany's retail sales are unexpectedly down on the year. At the same time, euro zone inflation was stable in August. But its 0.2 per cent rise was lower than forecast. (SOUNDBITE) (English) WILSON KING INVESTMENT MANAGEMENT, HEAD OF RESEARCH, RICHARD HUNTER, SAYING: "Like the rest of the world, the inflation picture is currently being muted not only by the fluctuating oil price, but we've also got food deflation kicking in as well, of course." It all adds up to more pressure on a European Central Bank that's missed its near two per cent inflation target in over three years. (SOUNDBITE) (English) WILSON KING INVESTMENT MANAGEMENT, HEAD OF RESEARCH, RICHARD HUNTER, SAYING: "Draghi and the ECB are more than ready to throw some more stimulus at the situation. As we've said in the past, it's long since been a concern in Europe on the debt front. It's now a concern on the growth front." The ECB's next rate-setting meeting is due on September 8.