Eurozone inflation exits negative territory in October

The inflation rate probably stood at zero in October, economists said before a report on Friday.

FRANKFURT-European Central Bank President Mario Draghi said in an interview published Saturday that it isn’t yet clear whether the central bank needs to embark on new measures to boost the eurozone economy at its next meeting.

Separate data released today showed the Eurozone’s unemployment rate fell from 10.9 to 10.8 per cent in the month to September.

“While euro area domestic demand remains resilient, concerns over growth prospects in emerging markets and possible repercussions for the economy from developments in financial and commodity markets continue to signal downside risks to the outlook for growth and inflation”, he said in his opening statement.

Processed food, Alcohol and Tobacco prices grew 0.6%, unprocessed food grew by 2.3%, non-energy industrial goods grew at 0.4% and services inflation at 1.3%.

“We will see if further stimulus is needed”. Consumer prices are forecast to remain flat on a yearly basis in October after falling 0.1% in September. It’s still expected to ease monetary policy further in December in the face of low inflation and weak economic growth.

“Starting from the middle of next year and through all 2017, thanks also to the delayed effect of exchange rate depreciation, we expect inflation to gradually increase”, he said. It also complicates efforts by bailed-out members of the eurozone such as Greece to make their economies more competitive with European trade partners.

“The euro zone is adding jobs at a decent pace and wage growth in the first half of the year reached 1.8 percent year-on-year, suggesting that core inflation will trend up rather than down in the medium term”, said ING economist Teunis Brosens.

Even with the signs of improvement in Italy, “the path toward levels of employment close to the rest of Europe seems to be an extremely long and hard one”, Riccardo Padovani, head of research institute Svimez told Bloomberg. Last week, two-year French notes became ineligible for QE at record-low yields of 0.29 percent. The BoE itself has, until recently at least, declined to cut its rates below 0.5 percent – due to the plethora of United Kingdom mortgage rates that track the policy rate but also because United Kingdom banks have typically never charged customers for current accounts.