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

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