PARIS (AFP) - Eurozone indicators to be released this week will show that inflation was slightly lower than initially estimated in October and that industrial output recovered in September, economists said.
In Britain, further evidence of consumer sluggishness was set to emerge as higher borrowing costs and a stalling global economic recovery take their toll.
EU statistics office Eurostat originally said that inflation jumped to 2.5 percent in October from 2.1 percent in September, as a result of the surge in oil prices to levels above 50 dollars a barrel.
But national data released since then suggested that the eurozone figure was likely to be revised down to 2.4 percent.
"Latest national data suggest that a downward revision to the flash estimate of 2.5 percent is probable," said Ed Teather of UBS.
Germany's October inflation rate was revised down to 2.0 percent from the provisional 2.1 percent and French inflation came in at 2.1 percent rather than the 2.2 percent expected by markets.
"Taken together, these reports suggest that a downward revision to the euro-area flash estimate of inflation is likely," said Michael Hume of Lehman Brothers after French and Spanish consumer prices data was published on Friday.
Eurozone core inflation was likely to remain unchanged at 1.9 percent in October, highlighting the fact that the recent jump in headline inflation was essentially due to higher oil prices.
Royal Bank of Scotland economists said Wednesday's eurozone numbers would go some way to easing fears over inflation.
But BNP Paribas said that even if the headline rate was revised down to 2.4 percent, this would still represent a reversal of the downward trend seen up to September and put inflation well above the European Central Bank's target of a rate below but close to 2.0 percent.
The ECB has already warned that inflation may now remain significantly above 2.0 percent for some months.
German October producer prices will also bear the marks of higher energy prices this week, said Annemarieke Christian of Morgan Stanley. German producer price inflation is expected to accelerate to 2.7 percent in October from 2.3 percent the month before.
Eurozone industrial output was likely to show a rebound in September after an August decline which largely reflected a steep fall in French car production as the result of the closure of a PSA Peugeot Citroen plant.
French manufacturing output rebounded 4.0 percent in September after a 2.6 percent drop in August, but production in other large eurozone countries was more subdued.
Output in Germany, the eurozone's largest economy, fell 1.2 percent, while production in Italy increased 0.5 percent.
"The strength of the rebound in French output, which accounts for just under 20 percent of the index, and in some of the region's smaller economies should see output rebound by 0.6 percent, reversing all of August's decline," Royal Bank of Scotland said.
In Britain, Thursday's official October retail sales data, and the monthly house price survey from the Royal Institution of Chartered Surveyors on Tuesday, were set to show consumption on the wane.
The consensus of analysts forecasts is for a 0.2 percent decline in retail sales on a monthly basis, while the RICS survey is expected to raise further concerns for homeowners.
Philip Shaw, chief Britain economist at Investec Securities, will be interested to see if retail sales hold up better than expected despite weak housing market trends.
If they do, and he was predicting a solid 0.3 percent monthly rise in retail sales, then it may vindicate the central bank's view, expressed in the Inflation Report, that there has been a "decoupling" of house prices and consumer activity in recent years.
A raft of weak economic data in recent weeks has convinced most Bank of England observers that the rate-setting Monetary Policy Committee will keep its key repo rate unchanged at 4.75 percent for the foreseable future.
The MPC has raised the cost of borrowing a quarter point on five occasions in the last year in an attempt to curb inflationary pressures stemming from rampant consumer demand and above-trend economic growth.
Official figures on Tuesday are set to show subdued price pressures in the economy.
The consumer price index was expected to rise by an annual 1.2 percent in the year to end-October, with higher oil prices pushing the rate up from September's 1.1 percent. Nevertheless, the rate remains far below the MPC's 2.0 percent target.
George Buckley, an economist at Deutsche Bank, said the main risks come from uncertainties about price movements in food, electricity and gas fares, airlines, education and financial services.
In its recent quarterly Inflation Report, the MPC said it expected CPI inflation to hit the target in around two years and rise slightly thereafter.
That relatively benign forecast cemented the market's view that interest rates were not likely to rise anytime soon.
11/14/2004 - 05:23 GMT - AFP