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Saturday 20 September 2014

Euro zone price inflation stays low but stable in June

Published 30/06/2014 | 12:43

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ECB chief Mario Draghi
ECB chief Mario Draghi

Euro zone inflation in June was flat, official data showed today, easing immediate pressure on the European Central Bank to act again soon to tackle slow price rises.

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Euro zone price inflation stays low but stable in JuneEuro zone price inflation stays low but stable in June

The year-on-year June inflation rate in the 18 countries sharing the euro stood at 0.5pc for the second month in a row, the European Union's statistics office Eurostat said.

It was the ninth straight month that inflation remained within what European Central Bank President Mario Draghi has called a "danger zone" of below 1pc.

Prices of food, alcohol and tobacco fell by 0.2pc June, while the prices of services rose by 1.3pc and energy costs were up by 0.1pc year-on-year, Eurostat data showed.

Core annual inflation - excluding energy, food, alcohol and tobacco - rose by 0.8 percent year-on-year in June after a 0.7pc increase in May.

Earlier this month, the ECB reacted to vanishing price inflation with a raft of measures, including cutting the deposit rate below zero and offering long-term loans to banks aimed at boosting lending to business.

The ECB insists that there is no acute risk of outright deflation in the €9.6 trillion economy. Three countries, however, experienced deflation in May.

Analysts polled by Reuters said the bank has probably done enough for now. Some, however, argue that a quantitative easing program to 'print money' will be required for any lasting impact.

The ECB lowered its forecast for euro zone inflation in June, predicting that it would reach 1.4pc in 2016 - far off its target of below but close to 2pc

The ECB's Governing Council meets again on Thursday.

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