End of deflation in sight for Eurozone as it edges back to stagnant prices

 
Jake Cordell
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The end of falling prices is coming into focus for the 19-member Eurozone
The end of falling prices is coming into focus for the 19-member Eurozone (Source: Getty)

The Eurozone took a tiny step towards inflation in May, as official figures showed the single currency bloc tip-toeing back towards normality.

Inflation is still in negative territory, with prices falling by 0.1 per cent over the last twelve months, according to figures released by Eurostat, but this was a very slight improvement on the minus 0.2 per cent rate of inflation recorded in April.

More encouragingly, for those including European Central Bank (ECB) president Mario Draghi who have attempted to get prices moving in an upwards direction, core inflation also increased from 0.7 per cent to 0.8 per cent. This measure strips out the most volatile elements and is seen by some as a more reliable indicator of the long-term outlook for inflation.

Low oil prices remained the main drag on inflation, but will soon fall out of the calculations which will provide a boost to the headline figures.

The Eurozone has been dipping in and out of deflation for around 18 months now, but today's figures, while only a modest improvement, could signify that the bloc is about the break out of the period of stagnating prices.

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