Zone Inflation Stuck In 'Danger Zone', Keeps Pressure On ECB
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[April 16, 2014]
BRUSSELS (Reuters) — A shock drop in
March euro zone inflation to its lowest level since November 2009 was
confirmed on Wednesday, keeping pressure on the European Central Bank to
intervene should prices not rebound.
The year-on-year inflation rate in the 18 countries sharing the
euro was 0.5 percent in March against 0.7 percent in February, the
European Union's statistics office Eurostat said.
The biggest rise in prices was observed for tobacco, restaurants and
bars as well as milk, cheese and eggs, while lower prices were
recorded for heating oil, telecommunications and fuel.
There was a stark disparity across the euro zone with countries such
as Greece (-1.5 pct) and Cyprus (-0.9 pct) seeing their prices fall
compared to last year.
Inflation rates in Austria (+1.4 pct), Malta (+1.4 pct) and Germany
(+0.9 pct) were nearer to the ECB's target of close to but below 2
Inflation has now been in the ECB's "danger zone" of below 1 percent
for six consecutive months, fuelling speculation that the ECB will
need to take further action.
ECB policy makers said the bank stood ready to deploy unconventional
measures to ensure that inflation did not stay low for too long.
ECB's President Mario Draghi expressed concerns at the euro's
strength on Saturday in Washington, trying to talk down the
currency, which influences domestic prices.
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The strength of the single currency against the dollar makes imports
cheaper and pushes down the prices Europeans pay for goods and
While this can give households more purchasing power in the short
run, the ECB wants to avoid a drop in inflation expectations.
(Reporting by Robert-Jan Bartunek and Martin Santa; editing by
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