European Confidence Unexpectedly Rises to 5-Year High

BY

Europeans' confidence in the economy unexpectedly increased to the highest in more than five years in September, underscoring the European Central Bank's concern that inflation will accelerate again next year.

An index of sentiment among executives and consumers in the dozen nations sharing the euro rose to 109.3, the highest since February 2001, from a revised 108.3 in August, the European Commission said today in Brussels. Inflation slowed to 1.8 percent in September, dropping below the ECB's 2 percent limit for the first time since January 2005, a separate report showed.

Slower inflation may help relieve concerns about price growth among ECB policy makers, who are preparing the ground for another rate increase at their next meeting on Oct. 5. Still, the rise in confidence may signal increased spending that would add to inflation pressures in the euro area.