Eurozone Aug inflation revised lower to 0.1%

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BRUSSELS: Inflation in the 19-country eurozone fell to 0.1 percent in August, revised data showed on Wednesday, in a sign that a dangerous spell of falling prices could be returning to Europe.

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The EU’s Eurostat agency slashed its first estimate of 0.2 percent, with tumbling oil prices having the biggest effect on prices in the single currency bloc.

Earlier this month, European Central Bank (ECB) head Mario Draghi warned that inflation in the euro could turn negative in the coming months, even if only temporarily.

Fears of deflation—a dangerous spiral of falling prices—had persuaded the ECB to launch in March a huge monetary stimulus program, to get inflation closer to its 2.0-percent target.

Initially the scheme appeared to work, slowly pushing inflation back up in core eurozone economies such as France and Germany.

But this latest data will increase the prospect for even more stimulus by the ECB, which has downgraded its inflation forecasts for the coming years in the face of falling oil prices.

Economists fear a prolonged period of deflation in which consumers delay purchases, triggering even more falling prices, slowing economic activity and inviting recession.      AFP

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