Wednesday, June 04, 2014

Euro Zone Edges Closer to Dreaded Deflation

JUNE 3, 2014

PARIS — Consumer prices in the euro zone ticked ever closer to outright deflation, official data showed Tuesday, making it almost certain that the European Central Bank will move to ease monetary policy this week.

Inflation in the 18 nations that share the euro rose at an annual rate of just 0.5 percent in May from a year earlier, down from a 0.7 percent rate in April, Eurostat, the statistical agency of the European Union, reported from Luxembourg.

The weak price pressures were pronounced even in Germany, now the strongest economy in the euro zone. Consumer prices there rose at just a 0.9 percent rate in May, down from 1.3 percent in April, and the lowest in four years.

Many economists say that inflation is already well below the danger zone for tipping into deflation, and some analysts have taken to calling the condition “lowflation.”

(More here.)


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