Eurozone inflation still stubbornly weak

31 Aug, 2016

BRUSSELS: Eurozone inflation and jobless data on Wednesday fell short of analyst forecasts as the economy bumps along amid speculation the European Central Bank will have to adopt more stimulus measures.

The official EU statistics agency Eurostat said eurozone consumer prices rose 0.2 percent in August, the same rate as in July.

Eurozone unemployment meanwhile was unchanged at 10.1 percent in July.

Analysts surveyed by financial services company Factset had expected inflation at 0.3 percent and unemployment at 10.0 percent in the 19-nation eurozone.

Inflation is a key indicator as it reflects underlying consumer demand in the economy and the figures have been well off the ECB's target of around 2.0 percent for several years.

The ECB, which has so far pumped up the economy with more than one trillion euros in easy money, has promised to do whatever it takes to prevent deflation.

Deflation -- when prices fall outright -- can be fatal as consumers put off purchases to wait for cheaper goods.

Doing so, however, undercuts demand and then investment, hitting employment and putting the economy into a dangerous downward cycle.

Copyright AFP (Agence France-Presse), 2016

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