BRUSSELS: Eurozone inflation dropped to the lowest level since the worst of the global financial crisis, EU figures showed yesterday, heaping pressure on the European Central Bank to go even further to avert the threat of deflation.
Growing concerns about exceptionally low price rises in the 18-country eurozone, which could augur a long period of low growth and falling prosperity, have prompted the ECB to take unprecedented action in recent months. But inflation fell again to 0.3 percent in September, the lowest for nearly five years and way below the ECB’s near-2.0 percent target. The EU’s data agency Eurostat also reported that eurozone unemployment remained unchanged at a high 11.5 percent in August, another sign that a hoped for recovery in the currency area was certainly over.
“September’s fall in eurozone inflation to a whisker above zero and August’s weak labour market data will add to the pressure on the ECB in the run-up to its meeting this Thursday,” said Jennifer McKeown, Senior European Economist at Capital Economics in London.
Unemployment in the eurozone is down from the record high of 12 percent a year ago, but still remains stubbornly present in several member countries. In August, unemployment in Spain fell from 26.2 a year ago to a still alarmingly big 24.1 percent. Half of Spain’s young workers remain jobless. Heavily-indebted France, the bloc’s second biggest economy, saw unemployment rise from 10.2 percent to 10.5 percent in 12-months. However in Germany, the bloc’s economic engine, August unemployment stood at a low 4.9 percent for August.
But for now, low inflation has become the central challenge to turn around the eurozone economy, with sluggish demand from households and businesses keeping prices low. AFP
