EZ’s Inflation Drop Raises Recession Concerns

The drop in eurozone inflation reported Tuesday was, in one sense, just a decimal point, another digit in the daily flow of depressing economic data. Yet it raised an increasingly urgent question: What will it take to arrest the Continent’s slow-motion descent toward another recession and, possibly, a renewed existential crisis?

It has been almost two years since inflation in the eurozone was at 2 percent, right around the level that the European Central Bank considers optimal for stability and growth. In September, according to an official estimate published Tuesday, the annual rate of inflation fell to 0.3 percent from 0.4 percent the month before.

Inflation is at a five-year low, leading many economists to warn that the eurozone economy is in danger of officially tipping into deflation. But even the current low level of inflation can cause consumers to delay making purchases, companies to lose revenue and unemployment to soar from already high levels.

NY Times

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