Eurozone Inflation Stays at 0.5% Still Below Danger Zone

The rate of inflation in the eurozone remained at 0.5% in June, marking the ninth consecutive month of below-target growth in the 18 member states.

Earlier this month the European Central Bank (ECB) introduced fresh measures designed to boost the eurozone, including a “below-zero” interest rate and cheap, long-term bank loans.

ECB president Mario Draghi has referred to inflation below 1% as being in “the danger zone”.

The bank wants inflation to be near 2%.

Flash estimates from the EU statistics office, Eurostat, show that the service industry was the only sector to report significant price growth, with a rise of 1.3%, but food, alcohol & tobacco prices were down 0.2%, and industrial goods remained unchanged.

Separate figures from the eurozone showed that retail sales in Greece enjoyed their strongest annual rise in more than two years in April, up 7.3% compared with the year before.

In Germany, retail sales in May were up 1.9% compared with the year before, but down 0.6% compared with April’s figures.

Earlier this month, the ECB became the first major central bank to introduce negative interest rates, in an effort to to get money moving into the stagnant eurozone economy.

There had been concerns that the eurozone could slip into deflation, raising fears that consumers might spend even less because they would expect prices to fall in future months.

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