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Inflation in the eurozone: prices remain at their lowest level since the end of 2016


The prices of food and beverages in the eurozone have risen sharply. Energy prices were down: inflation remained at its lowest level since November 2016.

Consumer prices in the eurozone rose by only one percent in August. This was reported by the European statistics agency Eurostat in a first estimate. Already in July, the inflation rate was one percent. She remains at its lowest level for more than two and a half years.

Core inflation, which excludes volatile components such as energy, remained at 0.9 percent in August. Core inflation is regarded as a benchmark for the inflation trend and is therefore also closely followed by the European Central Bank (ECB) in monetary policy decisions.

In August, foods and stimulants, which cost on average 2.1 percent more than a year before, rose the most. Services, including rents, were 1.3 percent more expensive. By contrast, energy prices fell by 0.6 percent.

Economists expect measures from the ECB

In the medium term, the ECB aims for an inflation rate of just under two percent. But this brand missed them for years. The central bankers are worried by the weak inflation, the trade dispute between the US and China and the gloomy economic outlook. The companies are also unsettled because of the approaching Brexit.

Most economists now expect the central bank to announce measures at its next meeting in Frankfurt on September 12, in support of the economy.

The ECB is currently reviewing a variety of measures, including interest rate cuts and asset purchases, which could boost the economy. For ECB chief Mario Draghi, the September meeting is the penultimate interest rate meeting, before his term ends in late October. This should take over the former IMF boss and former French Minister of Finance Christine Lagarde the helm.

Source: spiegel

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