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Eurozone Inflation Eases Further in February

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Eurozone Inflation Eases Further in February

Consumer inflation in the Eurozone fell further below target in February, a sign deflationary pressures still threaten to undermine recovery in the 18-nation currency bloc.

Eurozone consumer inflation rose 0.7 percent annually in February, according to a revised estimate from the European Commission. The so-called core measure, which excludes volatile goods such as food, energy, alcohol and tobacco, rose 1 percent.

Month-on-month, inflation rose 0.3 percent. The price of services increased at a monthly rate of 0.5 percent, as did energy, food, alcohol and tobacco. Non-energy industrial goods rose at a monthly rate of 0.5 percent.

Four Eurozone member-states reported negative inflation growth in February, official data showed. Consumer prices declined 1.3 percent in Cyprus, 0.9 percent in Greece and 0.1 percent in both Portugal and Spain. Inflationary pressures in Germany weakened from 1.2 percent to 1 percent. Annual inflation in the Netherlands eased from 0.8 percent to 0.4 percent and in Luxembourg from 1.5 percent to 0.8 percent.

Last October marked the first time in four years annual inflation dropped to 0.7 percent, prompting the European Central Bank to cut interest rates to 0.25 percent, a record low. The drop to 0.7 percent last month is unlikely to illicit a significant response from the ECB at next month’s rate meeting. The ECB, which has promised to safeguard the currency region against falling prices, considers the threat of deflation to be “quite limited.”

The ECB, which has targeted inflation just below 2 percent, expects prices to increase gradually over the next several years. Consumer inflation is expected to rise 1 percent this year and 1.5 percent in 2016.

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