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Eurozone Inflation Falls Again

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Eurozone Inflation Falls Again

Eurostat has just released a crucial Eurozone inflation data update and once again the single currency bloc is confirmed as heading towards a deflationary spiral.

The headline Core Consumer Price Index (CPI) year on year has been reported at 0.7%, this is down from the previous reading of 1.0%, a fall had been expected but only to the 0.8% level.

The non Core figure met expectations of 0.5% but is also down on the February number of 0.7%. Month on month this number came in at a 0.9% change.

There are no real surprises in today’s Eurozone inflation data, most member countries have been reporting their individual price growth rates over the past few days and these have all been pointing to an overall drop in the bloc’s inflation rate. The European price stability situation has now reached a point that it is attracting comment and criticism from global institutions and governments. The US Treasury Secretary, Jacob Lew, publically expressed concern at the lack of control over the situation last week, this was followed up by a serious of rebukes and recommendations at last week’s International Monetary Fund conference in Washington.

Disinflationary pressure has been evident within the Eurozone for the past half year, the European Central Bank (ECB) used a one off up tick earlier this year to shy away from taking definitive action to address the falling rate of price growth.

Growing global pressure and mounting confirmations of slowing price rises have finally prompted the ECB to make a definitive statement on the issue. The ECB chair, Mario Draghi, has confirmed that the Bank will now be addressing the situation as a priority. There however is no confirmation or indication as to the nature of the action that the ECB intends to take. One thing is for certain at this point and that is that the wait and see approach favored by the ECB has not worked.

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