Annual inflation in the eurozone turned negative in September due to sharply lower energy prices, the EU’s statistics office confirmed yesterday, maintaining pressure on the ECB to increase its asset purchases to boost prices.
Eurostat said consumer prices in the 19 countries sharing the euro fell by 0.1% in the year to September, dipping below zero for the first time since March, and confirming its earlier estimate. Prices were 0.2% higher in September than in August.
Eurostat said milk, cheese and eggs were cheaper, while heating oil and motor fuel stripped almost a full percentage point from the annual rate.
Restaurants and cafes, vegetables and tobacco had the biggest upward impact.
Excluding the most volatile components of unprocessed food and energy — what the ECB calls core inflation — prices were 0.8% up year-on-year, slightly down from the previous reading of 0.9%. Month-on-month, they rose 0.4%.
Long-term inflation expectations have dropped to their lowest since February, before the ECB’s asset purchases started, as China’s economic slowdown, the commodity rout and paltry eurozone lending growth reinforce pessimistic predictions.
Under its quantitative easing scheme, the ECB is buying government bonds and other assets to pump around €1tn into the economy, aiming to lift inflation towards its target rate of just under 2%.
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