Eurozone inflation drop prompts fears of deflation
Tuesday 07 January 2014
The threat of deflation in the eurozone was back on the radar of the European Central Bank after figures showed a surprise slowdown in the cost of living to 0.8 per cent in December.
THE threat of deflation in the eurozone was back on the radar of the European Central Bank today after a surprise slowdown in the cost of living to 0.8 per cent in December.
ECB president Mario Draghi, who stunned markets with an interest rate cut to a record low of 0.25 per cent in November, is struggling to reflate the eurozone economy to hit an inflation target of close to 2 per cent.
The Consumer Prices Index fell below 1 per cent for the first time in almost four years last October.
The latest figures come two days before ECB rate-setters announce their first policy decision of the new year.
Draghi last week said there was no urgent need for another rate cut, but added that it was vital to avoid inflation getting permanently stuck below 1 per cent.
Today’s slowdown came despite the lower cost of energy, unchanged in December after a 1.1 per cent fall in November, falling out of the figures. Services inflation also slowed.
In Germany headline inflation has slowed to 1.2 per cent, but in struggling Spain it is 0.2 per cent and Greece is in outright deflation territory with prices 2.9 per cent below a year earlier.
ING Bank economist Peter Vanden Houte said: “Today’s figures show that it’s too early for the ECB to become complacent about deflation risks, especially in peripheral countries.
“While we believe that for the time being the ECB will keep its monetary policy unchanged, not much is needed to push the central bank into action.”
Apple agrees deal with Visa on contactless payments
- 1 Half of young women unable to ‘locate vagina’ and 65% find it difficult to say the word
- 2 Perez Hilton apologises for Jennifer Lawrence naked photo leak
- 3 A teacher speaks out: 'I'm effectively being forced out of a career that I wanted to love'
- 4 Mexican woman becomes world’s 'oldest person' at 127
- 5 Jennifer Lawrence 'naked sex video' will be leaked threatens 4Chan celebrity photo hacker
iPhone 6 'hidden code' could indicate sharper screens or bigger phones
Perez Hilton apologises for Jennifer Lawrence naked photo leak
Ariana Grande nude photos leak: 'These are completely fake' say singer's representatives
A teacher speaks out: 'I'm effectively being forced out of a career that I wanted to love'
Kate Upton nude pictures leak: Model's representatives 'looking into' authenticity of naked images
Rotherham child sex abuse scandal: Labour Home Office to be probed over what Tony Blair's government knew - and when
Robin Williams Emmys tribute led by Billy Crystal criticised for including 'racist' joke about Muslim woman
The Rotherham child abuse scandal is a tale of apologists, misogyny and double standards
What do immigrants really think of Britain? Polish immigrant's Reddit post goes viral
Do you realise just how foolish the UK looks?
With Douglas Carswell joining Ukip, my party has taken another giant step forward
iJobs Money & Business
£85000 per annum: Harrington Starr: Head of IT (Windows, Server, VMware, SAN, ...
£40000 - £50000 per annum: Harrington Starr: You will not be expected to hav...
£500 per day: Harrington Starr: SQL DBA/Developer SQL, C#, VBA, Data Warehousi...
£650 per day: Harrington Starr: .NET Developer C#, Win Forms, WPF, WCF, MVVM,...