Irish prices show biggest decline of EU countries

EUROPE’S inflation continued to decline in August with consumer prices in Ireland falling the most.

Lower energy prices and growing joblessness hit spending resulting in the third consecutive fall in inflation in August.

For last month the inflation rate in Ireland fell by -2.4% followed by Portugal at -1.2% and Cyprus, which declined by -0.9%.

At the opposite end of the spectrum the highest rate of inflation was recorded in Hungary (5.0%), Romania (4.9%) and Poland (4.3%).

Compared with July 2009, annual inflation fell in eight EU member states, remained stable in two and rose in 17.

Prices in the 16-nation euro region fell 0.2% from a year earlier, after declining 0.7% in July, according to the EU statistics office.

The August decline matched the estimate published on August 31, the figures confirmed.

The core inflation rate, which excludes volatile food and energy costs, held at 1.3% in August.

Due to the continuing fall in the cost of living in the euro area, the ECB earlier this month held interest rates at historic lows of 1% set in May 2009, in a further effort to spur consumer demand to boost economic growth.

Loss of jobs caused by the global economic slump has hit the euro area hard, but there are signs that key economies like Germany and France are starting to see tentative green shoots of recovery.

That shift is reflected in the slow down in the pace of decline in the euro area of 0.2% for August, which is in sharp contrast with the much bigger fall of 0.7% that occurred in July.

This followed publication of figures on Monday indicating the eurozone is likely to have emerged from its worst recession since WWII by the end of this month.

The slowdown in the pace of decline in the consumer price index raises further hopes of an economic rebound in the coming months, analysts said.

Uncertainty over the emerging recovery persists and some analysts have warned the move out of recession in the US and other major economies might be a false dawn.

“We’re seeing the first signs of stabilisation” in the economy, EU Monetary Affairs Commissioner Joaquin Almunia told the European Parliament yesterday.

“However, we are not yet in a situation where we can say economic activity can maintain itself.

“There are risks of regression.”

Job losses continue to increase in most economies raising fears that worse is till to some.

Such a pattern is normal as economies go through the transition from recession to renewed economic growth according to some economists.


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