Eurozone Inflation Falls in August to Five Year Low

The eurozone inflation rate has fallen to 0.3% in August, near a five-year low, adding to fears of a deflationary spiral, according to Eurostat figures.

That compares with a rate of 0.4% in July.

The drop, driven by lower food and energy prices, will add to pressure on the European Central Bank (ECB) to take action to stimulate the economy.

Separate figures showed the unemployment rate remained near a record high at 11.5% in July.

The ECB meets next Thursday to decide on interest rates.

Most analysts are not expecting any action yet, but speculation is growing that in the coming months it may inject money into the system, a practice called quantitative easing, in the hope of stimulating growth and pushing up prices.

Mario Draghi, head of the ECB, has previously described inflation at below 1% to be in a “danger zone”.

via BBC

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza