ADVERTISEMENT
News » Money
Sep 30, 5:38 AM EDT

Down at 0.3 percent in year to September, eurozone inflation stands at near five-year low


World Video

Buy AP Photo Reprints
Multimedia
A district summary of the Beige Book
Measuring economic stress by county nationwide
Mall malaise: shoppers browse, but don't buy
Unemployment by the numbers
Family struggles with father's unemployment
Saying an affordable goodbye
Hard times hit small car dealer
Latest Economic News
Down at 0.3 percent in year to September, eurozone inflation stands at near five-year low

Economy survey predicts strong business, government growth; consumer spending expected to lag

Economy's second-quarter rebound was even faster than thought, and outlook remains bright

Spain hopes to create 622,000 jobs by end of 2015, raises economic growth predictions

Survey finds conflicts, European economic weakness weighing on German consumers

Castro names his reform 'czar' as economy minister, citing need to harmonize overhaul efforts

ADB cuts growth forecast for Southeast Asia this year and next due to slower domestic demand

More than 100 arrested at Wall Street climate crisis protest

As Scotland rejects independence, businesses and investors breathe sigh of relief

New York developer to invest $108 million in Puerto Rico apartment-commercial project

Interactives
Greece's Debt Threatens to Spread
State budget
gaps map
Auto industry problems trickle down, punish Tennessee county
Women give old Derby hats a makeover in tough economy
S.C. town deals with highest unemployment in South
How mortgages were bundled and sold as securities
Tracking the $700 billion financial bailout
Tracking the year's job losses
State-by-state foreclosures since 2007
Credit crisis explained
Presidents and their economic legacies
Lexicon of the financial crisis
Americans' addiction to debt
Related Stories
Hoke facing plenty of heat after another ugly loss for Michigan, this 1 to Minnesota

Video of Illinois lawmaker's tirade resurfaces in one of nation's most competitive House races

LONDON (AP) -- Inflation across the 18 countries that use the euro dipped further toward zero in September, official figures showed Tuesday, a move that's likely to maintain pressure on the European Central Bank to back further stimulus measures.

In its first estimate, the EU's statistics office, Eurostat, said consumer prices in the eurozone rose only 0.3 percent in the year to September against the previous month's 0.4 percent.

The fall was widely anticipated in financial markets and was largely due to a hefty 2.4 percent fall in energy prices.

But it leaves inflation at its lowest level since October 2009 and way below the ECB's target of just below 2 percent. That's primarily why the ECB has cut its main interest rate to a record low of 0.05 percent and unveiled programs to get bank credit flowing.

By shoring up economic activity with stimulus measures, the ECB hopes to keep inflation from remaining too low - a growing economy can drive up wages as unemployment falls and fuel inflation. Separate figures Tuesday showed that unemployment in the eurozone was unchanged in August at a still sky-high 11.5 percent.

The ECB, like all other central banks, would rather see a modest inflation rate than a very low one. A particularly concern would be a sustained period of falling prices - so-called deflation can make consumers delay purchases as they anticipate lower prices and make businesses reluctant to invest. Japan is the most recent example of a major economy in the grip of deflation - two decades on, the world's third-largest economy is still struggling to emerge from its period of stasis.

Despite the latest drop in inflation, the ECB is not expected to announce any further stimulus measures at the conclusion of its monthly policy meeting on Thursday, which this time takes place in Naples, Italy, as opposed to the bank's headquarters in Frankfurt, Germany.

The ECB is likely to hold its fire, primarily because the last set of stimulus measures it announced at the start of September have yet to work through the eurozone economy. However, if there's little evidence that prices or economic activity are picking up, then the ECB, under the stewardship of its president, Mario Draghi, may consider further action in coming months.

One policy alternative that has been proposed in some European capitals, particularly those that have suffered the most over the past years of financial and economic crisis, is to back a monetary stimulus on the lines of those pursued by the Federal Reserve and the Bank of England. That would mean buying large amounts of government bonds with newly-created money.

However, many governments, particularly in Germany, Europe's powerhouse economy, are wary of such a move. Draghi has also said repeatedly that the ECB can only do so much - governments, he says, must speed up reforms of their economies to make them more competitive.

© 2014 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed. Learn more about our Privacy Policy and Terms of Use.

 
ADVERTISEMENT