Europe still has a problem with low inflation

 
James Nickerson
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The euro area has slightly higher inflation that the European Union (Source: Getty)

While consumers may be happy to see prices rising more slowly, central bankers and politicians around Europe are a little more nervous about how they are are behaving across the European Union and Eurozone.

The European Union experienced annual inflation of just 0.1 per cent in June and the Eurozone only did marginally better with consumer prices rising by 0.2 per cent in the year to June, according to Eurostat, the European Commission’s statisticians.

The UK rate of inflation in the year to June 2015, measured by the consumer price index (CPI), was completly stagnant at 0 per cent (also dubbed noflation), down from 0.1 per cent in May 2015, missing the Bank of England’s target of two per cent.

Read more: Inflation back to zero: Here's what the analysts said

The Eurozone also missed its target of close to, but below, two per cent, and was down from 0.3 per cent in May, but core prices, which strip out goods such as energy and food which can be volatile, rose by 0.8 per cent.

Much dreaded deflation was observed in eight member states, with prices falling by 2.1 per cent in Cyprus and 1.1 per cent in Greece.

Meanwhile, in the larger Western economies, inflation also lagged, with France recording 0.3 per cent and German 0.1 per cent.

Read more: Eurozone inflation and jobs improve but recovery remains fragile, experts warn

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