Eurozone exits deflation

Threat of persistent price decline removed while inflation stays at zero percent annually

Updated Jul 28, 2015

April marked the end of the four month of deflation in the eurozone as consumer prices stayed unchanged compared to levels in previous years.

The change in consumer price in 19 countries of eurozone was constant at zero percent in April, after falling 0.1 percent in March, according to the Eurostat, the European Union’s statistics office.

European Central Bank (ECB) wants to keep inflation below but close to 2 percent over the medium term. In order to achieve this, the ECB started its quantitative easing program in March to stimulate the economy and avert the risk of deflation.

With the aversion of deflationary risks, some have already started to question the duration of ECB’s quantitative easing program, which is scheduled to end in September 2016.

Economists predict a positive inflation in the last half of 2015 as energy prices push up, which have declined almost 50 percent since last June.

The declines in the cost of energy were the main drive behind the weakness of the prices. Although oil prices experienced some 15 percent increase during April, the cost of energy was still 5.8 percent cheaper in the same month, compared to a year earlier.

Core inflation, excluding volatile energy and unprocessed food costs, stayed at 0.6 percent year-on-year, which excludes a monthly calculation for April from Eurostat.

In a separate report released by the Eurostat, unemployment in the eurozone also remained stable in March, a little above the expected 11.2 percent. 36,000 out of 18.105 million unemployed found jobs this month, showing a slightly positive sign for the eurozone economy.

TRTWorld and agencies