Eurozone inflationary pressures have weakened even further, with a closely-watched indicator of underlying price trends falling to the lowest since before the launch of the euro in 1999.
Annual inflation excluding volatile energy and unprocessed food prices fell to just 0.8 per cent in February in the 16-country region, according to Eurostat, the European Union’s statistical office. That was the lowest since comparable figures started in January 1997.
The latest figures will add to the pressure on the European Central Bank to maintain its ultra-loose monetary policy. They reflected not just the fragility of the eurozone’s economic recovery “but also emphasise the risk of deflation,” said Carsten Brzeski, economist at ING in Brussels. “[It's getting] hard to find any upside risks to price stability,” he added.
Nonetheless, ECB policymakers argue that risks of full-blown deflation – a sustained period of general price falls – in the eurozone have receded.
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