Saturday

16th Dec 2017

Eurozone edges out of deflation

  • Prices were flat in April, ending four months of deflation across the eurozone (Photo: Jan Willem van Wessel)

The eurozone edged out of a four-month period of deflation in April, according to the EU’s statistical agency.

An estimate by Eurostat released on Thursday (30 April) found that consumer prices were flat in April 2015, up from -0.1% in March. Prices had fallen for four consecutive months since December.

Thank you for reading EUobserver!

Subscribe now for a 30 day free trial.

  1. €150 per year
  2. or €15 per month
  3. Cancel anytime

EUobserver is an independent, not-for-profit news organization that publishes daily news reports, analysis, and investigations from Brussels and the EU member states. We are an indispensable news source for anyone who wants to know what is going on in the EU.

We are mainly funded by advertising and subscription revenues. As advertising revenues are falling fast, we depend on subscription revenues to support our journalism.

For group, corporate or student subscriptions, please contact us. See also our full Terms of Use.

If you already have an account click here to login.

Although energy prices continue to be the main drag on prices, following a further 5.8 percent in April, on the back of the continued low oil price, services and food were both up - services by 0.9 percent.

Although the rebound in prices is far from complete, the deflationary spiral appears to have ended ahead of expectations.

In the European Commission’s Winter Economic forecasts, published in February, Economics commissioner Pierre Moscovici predicted that prices would not start to increase until the second half of 2015.

A number of policy-makers had expressed fears that extremely low inflation in the eurozone could result in the kind of falling prices that have dogged Japan’s economy for two decades.

The news also serves as early vindication for the European Central Bank, whose €1.1 trillion bond-buying programme was intended, in part, to boost prices.

At the announcement of the programme in January, ECB president Mario Draghi said that it would remain in place “until we see a sustained adjustment in the path of inflation which is consistent with our aim of achieving inflation rates below, but close to, 2%”.

In its monthly economic bulletin published on Thursday, the ECB stated that inflation would remain low for several months before gradually increasing.

“The gradual increase should be supported by the favourable impact of the ECB’s monetary policy measures on aggregate demand, the impact of the lower euro exchange rate and the assumption embedded in futures markets of somewhat higher oil prices in the years ahead,” the bank stated.

Meanwhile, household income and spending per capita edged up by 0.1 percent in the fourth quarter of 2014.

Analysis

Deflation in Europe: curse, ogre or benign?

The eurozone economy has never experienced a protracted period of deflation. That is what is facing it now. The question is whether it matters.

Opinion

The ECB must act now to prevent deflation

If the ECB continues to sit on its hands over monetary policy and politicians in Brussels continue to believe neo-liberal dogma about self regulating markets and automatic stabilisers, expect things to get far, far worse, fears George Irvin.

Showdown EU vote on asylum looking likely for next June

Divisions on relocating asylum seekers remain entrenched following an EU summit. The east-west divide opens up the possibility of relying on a majority vote for a key asylum in June, further exacerbating disputes among opposing capitals.

News in Brief

  1. EU adopts 'track-and-trace' tobacco system
  2. Luxembourg appeals Amazon tax decision
  3. EU leaders agree to open phase 2 of Brexit talks
  4. Juncker: May made 'big efforts' on Brexit
  5. Merkel took 'tough' line on Russia at EU summit
  6. EU leaders added line supporting 'two-state' solution
  7. EU leaders agree to 20 European Universities by 2024
  8. Belgian courts end legal proceedings against Puigdemont

Stakeholders' Highlights

  1. Dialogue PlatformThe Gülen Community: Who to Believe - Politicians or Actions?" by Thomas Michel
  2. Plastics Recyclers Europe65% plastics recycling rate attainable by 2025 new study shows
  3. European Heart NetworkCommissioner Andriukaitis' Address to EHN on the Occasion of Its 25th Anniversary
  4. ACCACFOs Risk Losing Relevance If They Do Not Embrace Technology
  5. UNICEFMake the Digital World Safer for Children & Increase Access for the Most Disadvantaged
  6. European Jewish CongressWelcomes Recognition of Jerusalem as the Capital of Israel and Calls on EU States to Follow Suit
  7. Mission of China to the EUChina and EU Boost Innovation Cooperation Under Horizon 2020
  8. European Gaming & Betting AssociationJuncker’s "Political" Commission Leaves Gambling Reforms to the Court
  9. AJC Transatlantic InstituteAJC Applauds U.S. Recognition of Jerusalem as Israel’s Capital City
  10. EU2017EEEU Telecom Ministers Reached an Agreement on the 5G Roadmap
  11. European Friends of ArmeniaEU-Armenia Relations in the CEPA Era: What's Next?
  12. Mission of China to the EU16+1 Cooperation Injects New Vigour Into China-EU Ties

Latest News

  1. Catalonia, Brexit, and Uber on EU agenda This WEEK
  2. Macron and Merkel take tough line on Poland
  3. Eurozone future needs structural reforms, EU leaders told
  4. Showdown EU vote on asylum looking likely for next June
  5. EU stresses unity as it launches next phase of Brexit talks
  6. Polish PM ready for EU sanctions scrap
  7. Dutchman to lead powerful euro working group
  8. EU mulls post-Brexit balance of euro and non-eurozone states