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Business

Sliding oil price drags German inflation to zero

The German statistics office, Destatis, has reported a drop in annual inflation to zero percent in February, down from 0.5 percent in January, and following further declines in energy prices over the winter.

Destatis inflation report for February cited the continuing sharp decline in crude oil prices as the main reason for the lower rate. It said the inflation rate would have been in positive territory were it not for the oil price slide. Energy prices as a whole were 8.5 percent lower in February compared with the same time last year.

The biggest price increases were recorded in the jewelry and watch sector, up 6.7 percent last month compared to the same time last year. Pieces of fruit were also notably more expensive than last year recording a 5.8 percent rise in February. Overall, food prices increased by 0.8 percent.

The Destatis report comes a day after the European Central Bank announced

a set of stimulus measures

aimed at boosting economic recovery in the eurozone, in part by nudging up inflation - which ECB President Mario Draghi has termed "dangerously low."

In its fight against further falling prices, the ECB resorted to even lower negative interest rates, meaning it charges commercial banks for keeping money with the central bank instead of lending it to the real economy.

Currently, inflation in the 19 countries which use the euro is at an annual rate of 0.2 percent. The ECB wants to see it at just under 2 percent, which is considered healthiest for the economy.

hch/uhe (Destatis, AFP, DPA)

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