Thursday 16 May 2013

Eurozone inflation falls to three-year low


Official figures show inflation in the 17-strong eurozone bloc has fallen to an average of 1.2% - a three-year low.
The figure, for April, was dragged down by falling prices in the face of weak demand across the eurozone.

A lower oil price was a dampener. It is down from just under $120 a barrel in March to about $100 a barrel now.
Figures on Wednesday showed that the eurozone was still in recession, as weak growth in some parts was offset by budget cuts and unemployment in others.
Inflation fell in France, which was reported to have slipped back into recession this year, and in Germany, which grew by an anaemic 0.1% in the first three months of this year.
Greece saw overall deflation - on average, prices were actually lower than previously - instead of what is seen in normal economic conditions, in which some prices rise and some fall.
Earlier this month, the European Central Bank (ECB) cut interest rates to a record 0.5%, a move designed to spark growth.
Low interest rates can also unleash inflation, but when economic growth is very weak, authorities worry more about deflation. This can depress economic activity, as consumers hold off buying goods in the expectation they will become cheaper in coming months.
There are few signs that inflation is likely to be a threat in the near future, it is well below the ECB's target rate of 2% in any case.
The highest price rises were found in Romania, Estonia and the Netherlands.