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Eurozone Deflation Continues
Consumer prices in the eurozone, which fell 0.2% in February, shrank 0.1% in March, according to Eurostat, the EU’s data service.
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Consumer prices in the eurozone, which fell 0.2% in February, shrank 0.1% in March, according to Eurostat, the EU’s data service.
The decline was driven entirely by slumping energy prices, which fell nearly 9% this month. When energy is ignored, the eurozone’s core inflation expanded 0.9% in March. That pace is less than half the 2% growth rate considered healthy by the European Central Bank.
Long-term deflation can damage an economy by encouraging consumers to postpone purchases in hopes of lower prices later. To help stimulate growth, the ECB has lowered its primary interest rate to 0%, dropped its bank deposit rate to -0.4% and increased its purchase of bonds by one-third to €80 billion ($91 billion) per month.
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