EZ and US Inflation Falls Back On Weak Energy Prices

Inflation in both the 17-strong eurozone bloc and the US has fallen to its lowest level in years.

The eurozone figure, for April fell to 1.2% – a three-year low. US inflation was running at 1.1% – a two-year low. Both countries target inflation at 2%.

In both cases the prime cause of the fall was a lower oil price, which is down from just less than $120 a barrel in March to about $93 a barrel now.

Weak demand across both economies was also a factor.

The sharp fall in the cost of fuel caused the US monthly inflation rate to fall at its sharpest pace since December 2008.

The US economy is growing more strongly than most of Europe, but remains patchy, while high unemployment has put downward pressure on wages, making it harder for retailers and other firms to raise prices.

BBC World News

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Dean Popplewell

Dean Popplewell

Vice-President of Market Analysis at MarketPulse
Dean Popplewell has nearly two decades of experience trading currencies and fixed income instruments. He has a deep understanding of market fundamentals and the impact of global events on capital markets. He is respected among professional traders for his skilled analysis and career history as global head of trading for firms such as Scotia Capital and BMO Nesbitt Burns. Since joining OANDA in 2006, Dean has played an instrumental role in driving awareness of the forex market as an emerging asset class for retail investors, as well as providing expert counsel to a number of internal teams on how to best serve clients and industry stakeholders.
Dean Popplewell