Euro-Zone Risk Deflationary Rut

As inflation in the euro zone languishes at its lowest level in four years, some analysts argue that the region is at risk of a Japan-style deflationary rut.

In October, the euro zone’s inflation reading came in at 0.7 percent on year, down from September’s 1.1 percent and a four-year low. Core consumer prices in Japan, which include oil but strip out volatile food prices, rose 0.7 percent in year to September with a broader measure rising 1.1 percent.

Japan, the world’s third biggest economy, has been plagued by deflation for almost two decades and inflation has only recently started to edge higher following aggressive monetary stimulus from the Bank of Japan.

Worries over low inflation levels prompted the European Central Bank to cut its benchmark interest rate by 25 basis points on Thursday.

CNBC

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