Inflation hits eight-month high in Eurozone

 
Jake Cordell
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Mario Draghi's policies may have lurched the Eurozone out of deflation
Mario Draghi's policies may have moved the Eurozone out of deflation (Source: Getty)

Prices are rising at their fastest rate in eight months across the Eurozone.

Inflation came in at 0.2 per cent for the month of July, up from 0.1 per cent in June and in line with previous estimates.

Although only modest, the figures crystallise the single currency bloc's exit from deflation after four consecutive months earlier this year when prices fell.

Core inflation, which strips out the most volatile movements in goods like energy and food, held steady at 0.9 per cent.

However, the EU's stats body, Eurostat, said negative annual rates had been observed in 12 member states, including Spain and Italy.

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Howard Archer, chief economist at IHS Global, said the figures were "marginally cheery news for the European Central Bank (ECB)", though he expected a return towards the ECB's "close to but below two per cent" target to take some time.

Lacklustre economic growth across the bloc, which came in at just 0.3 per cent in the second quarter of the year, is expected to prompt the ECB into action later this year with more monetary stimulus.

Interest rates are already at minus 0.4 per cent, and President Mario Draghi previously hinted he was trepidatious about taking that rate any lower. However, the Bank is also engaging in an €80bn (£68.8bn) a month quantitative easing programme which economists believe will be extended beyond its current finish date of March 2017.

The prospect of more extreme measures, such as helicopter money, has also been mooted. Euro-watchers won't have to wait long to get an update on how likely further stimulus is, with the minutes of the latest ECB meeting being released later today.

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