Friday 9 December 2016

Eurozone deflation close to inflexion point

Published 18/04/2015 | 02:30

Eurozone consumer prices could now hit positive territory in April, said Howard Archer of IHS Global.
Eurozone consumer prices could now hit positive territory in April, said Howard Archer of IHS Global.

Consumer prices in the eurozone remained stuck in negative territory in March but a return to positive price growth could now be around the corner.

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Official figures confirmed inflation was just -0.1pc in March, following a 0.3pc descent in February. Nine out of the bloc's 19 members are now in deflationary territory, down from 17 in January. But in encouraging signs for the flagging currency bloc, month-on-month inflation rose by 1.1pc suggesting a descent into entrenched deflation is now unlikely.

Annual inflation in Ireland was -0.3pc in March but month-on-month inflation rose 0.6pc under the European Union method of measuring inflation.

Eurozone consumer prices could now hit positive territory in April, said Howard Archer of IHS Global.

The European Central Bank unleashed a €1.1 trillion bond-buying programme to revive price growth last month. The programme is due to last until September 2016 at least, with the ECB hinting inflation is likely to hit 1.8pc 2017.

"Even if the eurozone does imminently exit deflation, it may still prove to be a hard slog to get eurozone consumer price inflation back up to the ECB's target rate of 'close to, but just below 2pc'," said Mr Archer.

"Much will depend on how oil prices and the euro develops, as well as how robust recovery proves to be."

Inflation figures from the US showed headline inflation has fallen to 0.1pc, but core inflation, which strips out volatile elements such as energy, rose to 1.8pc from 1.7pc in February. "Headline inflation will begin to move higher," said Rob Carnell at ING.

Mehreen Khan

Irish Independent

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