Sunday

22nd Oct 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.

Investigation

The mysterious German behind Orban's Russian deals

Klaus Mangold, a German businessman with good connections in Russia, and who provided a jet for Commission vice-president Guenther Oettinger, played a crucial role in Hungary's controversial Paks nuclear deal with Russia, Direkt36's investigation has found.

Turkey funding cuts signal EU mood shift

EU leaders at their summit spent some three hours deliberating on relations with Turkey before asking the EU commission to come up with a plan on cutting and reorienting some €4.5 billion in pre-accession aid.

News in Brief

  1. Rajoy to trigger Article 155 on Saturday in Catalan crisis
  2. EU conducts unannounced inspection of German car firm
  3. Lithuania calls for new EU energy laws
  4. EU leaders aim for December for defence cooperation
  5. Juncker says hands tied on Russia pipeline
  6. Czechs set to elect billionaire Andrej Babis
  7. Italian regions hold referendums on more autonomy
  8. EU leaders refuse to mediate Catalonia conflict

Stakeholders' Highlights

  1. Mission of China to the EUPresident Xi Jinping Proposes Stronger Global Security Governance at Interpol Assembly
  2. European Friends of ArmeniaEU Engagement Could Contribute to Lasting Peace in Nagorno-Karabakh
  3. UNICEFViolence in Myanmar Driving 12,000 Rohingya Refugee Children Into Bangladesh Every Week
  4. European Jewish CongressBulgaria Applauded for Adopting the Working Definition of Antisemitism
  5. EU2017EENorth Korea Leaves Europe No Choice, Says Estonian Foreign Minister Sven Mikser
  6. Mission of China to the EUZhang Ming Appointed New Ambassador of the Mission of China to the EU
  7. International Partnership for Human RightsEU Should Seek Concrete Commitments From Azerbaijan at Human Rights Dialogue
  8. European Jewish CongressEJC Calls for New Austrian Government to Exclude Extremist Freedom Party
  9. CES - Silicones EuropeIn Healthcare, Silicones Are the Frontrunner. And That's a Good Thing!
  10. EU2017EEEuropean Space Week 2017 in Tallinn from November 3-9. Register Now!
  11. European Entrepreneurs CEA-PMEMobiliseSME Exchange Programme Open Doors for 400 Companies Across Europe
  12. CECEE-Privacy Regulation – Hands off M2M Communication!

Latest News

  1. The mysterious German behind Orban's Russian deals
  2. Mogherini urged to do more on Russian propaganda
  3. Turkey funding cuts signal EU mood shift
  4. Posted workers top EU agenda This Week
  5. Leaders lobby to host EU agencies at summit's margins
  6. Legal tweak could extend EU control on Russia pipeline
  7. Ukraine language law does not harm minorities
  8. EU begins preparations for Brexit trade talks