Eurozone Inflation Falls Again Into ECB Danger Zone

July 31, 2014 Share Print 0

Eurozone inflation has fallen to its lowest level since the height of the financial crisis, sliding further into what the European Central Bank (ECB) has described as a “danger zone”.

Prices rose in the single currency area by 0.4% in July, from 0.5% in June.

The ECB considers that an inflation rate of below 1% poses a risk of deflation.

Separate figures show that unemployment in the region fell slightly to 11.5% in June compared to 11.6% in May.

The new inflation figures from the European Union’s statistical office, Eurostat, show that the rate remains persistently below the ECB’s target rate of 2%. Prices have risen at an annualised rate of less than 1% for the last ten months.

Central Bank governor, Mario Draghi, has previously warned that he would deem inflation below 1% to be in a “danger zone”, which could lead to prices tipping into a deflationary spiral.

via BBC

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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.