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Monday, February 29, 2016, Falgun 17, 1422 BS, Jamadiul Awwal 19, 1437 Hijri

Eurozone falls back into deflation
Observer Online Desk
Published :Monday, 29 February, 2016,  Time : 9:17 PM  View Count : 1
Consumer prices in the eurozone fell sharply in February to minus 0.2%, putting more pressure on the European Central Bank.

The slide into deflation is a sharp reversal from the revised 0.3% increase recorded in January.

It is the first fall in inflation since September when it shrank by 0.1%, according to Eurostat.

Energy drove the decline, with prices down 8% in February compared to a 5.4% slide in January.

The dismal figures have dashed hopes that ECB efforts to boost prices were working. That raises the chance of the bank announcing further stimulus measures next month.

It has already announced a cut to its bank deposit rate, which remains in negative territory.

ECB chief Mario Draghi insisted earlier this month the policies were working.

Nordea economist Holger Sandte said: "Deflation would be a disaster for the euro area as the burden of high debt would increase. Therefore, the ECB will continue easing monetary policy significantly.

"But no matter what the ECB decides to do on 10 March, inflation is likely to hover around zero during the next few months before it picks up - if oil prices behave well."

Economic sentiment across the eurozone deteriorated more than expected in February, according to research by the European Commission.

The Group of 20 (G20) finance ministers and central bankers agreed on Saturday to use "all policy tools, monetary, fiscal and structural - individually and collectively" to renew growth.


Editor : Iqbal Sobhan Chowdhury
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