Eurozone inflation falls to all-time low of 0.5% in March

New fall stokes fears of deflation

Mario Draghi, the President of the ECB (Reuters)

Inflation in the eurozone hit an all-time low of 0.5% today, building pressure on the European Central Bank to embark on money-printing to ward off the threat of deflation.

ECB president Mario Draghi cut interest rates to just 0.25 per cent last year but March’s fall — down from February’s 0.7 per cent — shocked economists.

ING Bank economist Martin van Vliet said the low number would “fuel talk of further monetary easing by the ECB”, which could beef up its forward guidance this week. The ECB’s target is just under 2 per cent.

In Japan, inflation remained at a five-year high of 1.3 per cent in February but industrial production fell ahead of a VAT hike tomorrow.