Sunday 25 September 2016

Eurozone inflation rate remains below zero in March

Published 31/03/2016 | 11:06

Eurostat said the headline inflation rate was minus 0.1% against the previous month's reading of minus 0.2%
Eurostat said the headline inflation rate was minus 0.1% against the previous month's reading of minus 0.2%

Consumer prices across the 19-country eurozone fell in the year to March for the second month running, official figures have shown.

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The drop came despite a modest improvement in inflation that had its roots in the services sector.

Eurostat, the European Union's statistics agency, said the headline inflation rate was minus 0.1% against the previous month's reading of minus 0.2%.

The modest uptick was in line with market expectations following recent figures showing a solid pick-up in German inflation.

Eurostat said the services sector is likely to have had the biggest impact in nudging up the headline rate, while energy prices once again provided the biggest drag.

One development that may cheer policy-makers at the European Central Bank (ECB) was the news that the core rate, which strips out the volatile items of food, alcohol, energy and tobacco, rose to 1% from 0.8%.

Still, both rates remain well below what the ECB wants - inflation at just below 2%.

The ECB has enacted a series of stimulus measures, such as cutting interest rates and buying government bonds in the markets, in order to get inflation back to target.

Since the last stimulus package was announced this month, few analysts think the central bank will do anything further soon. But in the longer term, many economists think the ECB may have to do more.

The ECB is worried that low or negative inflation will prompt even more economic stagnation in the eurozone.

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