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Low eurozone inflation

May 15, 2014

Inflation in the 18-member euro area has remained unusually low, making ECB officials think harder about corrective action. The central bank is now widely expected to take counter-deflation measures in June.

Grocery store in Germany
Image: Fotolia/Bauer Alex

Inflation in the eurozone increased only marginally to 0.7 percent in April, up from 0.5 percent a month earlier, the EU's statistics office, Eurostat, said Thursday.

But in the same month a year ago, the inflation rate still stood at 1.2 percent which even then was well below the European Central Bank's target of an annual rate close to 2 percent.

Economists emphasized deflation worries in the eurozone were still wide-spread, with a low rise or even decrease in consumer prices considered harmful for the area's economy trying to consolidate its nascent upswing.

Ending the waiting game?

Following Thursday's Eurostat figures, the ECB looked even more likely to keep preparing for corrective measures next month on the basis of the bank's own inflation and growth calculations for the single-currency bloc.

"The Council is resolved to find an adequate response within our mandate to a protracted period of low inflations and the risks that come with it," ECB President Mario Draghi said during the council's last meeting.

ECB Chief Economist told the German newspaper Zeit that one possible response could be decreasing record-low refinancing rates even further in order to make it easier for private households and companies to secure cheaper credit lines.

hg / rs (dpa, Reuters, AFP)