21.04.2017 11:13:59

Eurozone Consumers Prepared To Keep Spending Up Despite Higher Inflation: IHS

(RTTNews) - Eurozone consumers will be prepared to keep spending at a decent rate despite higher inflation eating into their purchasing power, IHS Markit Economist Howard Archer, said.

Data published by the European Commission on Friday showed that the consumer sentiment index rose to -3.6 in April from -5 in March. A similar high score was last seen in March 2015.

The economist noted March's rise in Eurozone consumer confidence was largely due to a renewed pick-up in sentiment over the economic situation and outlook after a dip in February while unemployment concerns eased markedly.

Archer said the improvement in confidence is an encouraging news for growth hopes, particularly as the consumer spending has been playing a leading role in recent solid Eurozone growth.

Improved labor markets and recent largely decent economic news are clearly buoying consumers, even though they do have concerns over markedly higher inflation, he noted.

However, he cautioned that the rise in confidence is not a guarantee that consumers will spend strongly. Much will likely depend on how well Eurozone labor markets do over the coming months, Archer said.

Despite the improvement in labor markets, Archer said wage growth remains limited in most Eurozone countries as appreciable labor market slack remains.

Furthermore, he noted that there remains a possibility that consumer confidence in the Eurozone could be periodically pressurized by political uncertainty and tensions over the coming months.