Eurozone inflation drops to four-year low | Business| Economy and finance news from a German perspective | DW | 31.03.2014
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Eurozone inflation drops to four-year low

Inflation in the 18-member euro area has fallen to a level not seen in over four years. The figures released by the European statistics office increased the pressure on the ECB to take further monetary policy action.

The eurozone's cost of living increased less rapidly in March, with Eurostat reporting a mere 0.5-percent increase for the month, following a 0.7-percent hike in February.

The statistics agency said on Monday that slowed-down inflation was mainly due to a 2.1-percent drop in energy costs, while food, alcohol and tobacco prices rose by 1.1 percent in March month-on-month.

Inflation in the euro area therefore logged the lowest rate since November 2009, at the height of the global financial crisis.

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Consumer prices have been taken deeper into what ECB President Mario Draghi had called the "danger zone" of an inflation rate below 1 percent and way below the central bank's target of just under 2 percent.

"We think it's only a matter of time before the ECB Governing Council will conclude that it needs to take further policy action to prevent a worsening of the medium-term inflation outlook," Capital Economics analyst Ben May said in a statement.

Draghi had already indicated the central bank was prepared to act again, after trimming the ECB's benchmark refinancing rate to just 0.25 percent.

In addition to cutting borrowing costs further, the bank could also launch a policy of quantative easing by pumping additional money into the fragile eurozone economy. It remained unclear, though, whether it would already announce concrete steps at its upcoming board meeting on Thursday.

hg/jr (AFP, Reuters, dpa)

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