Eurozone inflation remains low in wake of energy price slump

Still, inflation remains far below the ECB’s goal of just under 2 percent, a level it hasn’t reached since early 2013. The region suffered two months of deflation, in April and May, before prices increased by 0.1% year-on-year in June and then by 0.2% in July.

Consumer prices in the 19-nation euro bloc rose 0.3% on an annual and seasonally adjusted basis in the eighth month of the year, the preliminary headline CPI from Eurostat revealed.

The figure reported Wednesday by statistics agency Eurostat was the same as in July and below economists’ expectations for an uptick to 0.3 percent.

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Policy makers have already deployed a raft of unconventional stimulus that includes large-scale asset purchases, negative interest rates and long-term loans that see banks getting paid for extending credit to companies and households.

“Low rates initially helped banks by reducing funding costs and improving clients’ credit profile but they are now curtailing profitability, Nouy told the newspaper in an interview”.

The governing council next meets on September 8, and some economists expect its members to either announce an extension of their bond-buying program beyond March 2017, or signal such a move is under consideration.

“Today’s data are a small negative surprise and highlight once more the ECB’s difficulties in reaching its goal”, said Holger Sandte, chief European analyst at Nordea Markets in Copenhagen.

Economists note that the drop in oil prices should get phased out of the inflation data in coming months, helping inflation edge up.

The weaker than expected eurozone-wide figures follow on from poor numbers from individual eurozone economies.

While the number of people without work fell by 43,000 during July despite the uncertainty created by the Brexit vote, that left the unemployment rate unchanged at 10.1%, more than double the US rate.

“With [the] survey data also pointing to a marked slowdown in growth ahead, there is a strong case for the European Central Bank to announce further policy easing”.

Euro-area inflation failed to accelerate in August, adding to signs that the euro area’s economic outlook deteriorated ahead of a European Central Bank meeting next week. AP material published by LongIsland.com, is done so with explicit permission. Doing so may result in civil and/or criminal penalties.