Eurozone inflation lower than expected in January, at 0.3 per cent

The prices of goods and services in the eurozone rose by only 0.3 per cent year-on-year in January, the EU statistics agency Eurostat said Thursday, revising a previous estimate downward.

Fears of deflation have dogged the 19-country European currency bloc, which has also been struggling to rev up its economy after emerging from recession more than two years ago. The European Central Bank (ECB) usually aims to have inflation at just under 2 per cent.

Economists fear deflation, as it can lead to reduced consumer spending amid expectations that prices will drop further, cutting into companies' profits and prompting them to cut their workforce, thus increasing unemployment.

Eurostat had initially estimated that the rate reached 0.4 per cent in January. Analysts had also expected that figure.

The 0.3-per-cent increase follows a rise of 0.2 per cent in December, when the ECB ramped up its efforts to head off a prolonged period of deflation. Many analysts believe that the bank will launch another set of monetary measures when it meets on March 10.

Energy prices continued to be a drag on inflation in January, falling by 5.4 per cent year-on-year. Prices rose, on the other hand, for services, food, alcohol and tobacco, as well as non-energy industrial goods, Eurostat said.

In the wider, 28-country European Union, inflation reached 0.2 per cent year-on-year in January.

Last update: Fri, 24/06/2016 - 08:49
Author: 

More from Europe

Ukraine moves to ban imports of Russian books

The import of Russian books into Ukraine would be sharply limited under new legislation passed in the Ukrainian...

Frankfurt airport test-runs new automatic immigration system

Frankfurt airport was testing out a new automatic immigration system on Thursday, the first time such a system has...

Italian president starts 48-hour round of talks on post-Renzi crisis

Italian President Sergio Mattarella was starting Thursday the hard slog of lifting his country from a political...

10 Italian school classes vote "Mein Kampf" among their top books

Ten classes of Italian high-school students included Adolf Hitler's anti-Semitic manifesto "Mein Kampf" among their...

France's Le Pen says she opposes free schooling for migrant children

French politician and head of the far right National Front party Marine Le Pen said Thursday that free education...