Eurozone Inflation Remains at 05 per cent.

Eurozone Inflation Remains at 0.5% per cent.

The EU statistics office Eurostat has released their predictions for inflation in the Eurozone.  It expects inflation to remain at 0.5% for  June. This could be the ninth consecutive month that inflation has remained below the growth target for the member states.

This month saw the European Central Bank (ECB) step up efforts to help boost growth by introducing new measures which included a below-zero interest rate and cheap long term loans.

This was the first time a major bank had used negative interest rates to try and enable money moving through the economy.

The services sector is shown to have had the highest annual rate of growth in June reaching 1.3%, an increase from the 1.1% in May. Food, alcohol and tobacco fell to -0.2% a drop of 0.3% when compared with May.

Comment

Deflation in Europe is a real fear.  Japan sufffered a period of deflation for 10 years. 

Inpact of Deflation?   People stop spending.  If will be cheaper tomorrow why buy today?  That is the problem.  If good services, materials and more canm be bought cheaper in the future, the economy will stagnate.  Already, food, drink and tobacco prices are falling in Europe.

Expect much more stimulii from the EU to prevent deflation.