BELOW target inflation is still being recorded in the Eurozone despite a nascent recovery, with the lowest consumer price index (CPI) growth in three and a half years revealed.
Figures released yesterday showed CPI at only 1.1 per cent in the 12 months to September, indicating the smallest rise in prices since the first quarter of 2010.
Inflation has persistently been below the European Central Bank’s target of nearly two per cent through the year so far.
James Howat of Capital Economics, said: “After their recent pick-up, economic indicators still point to fairly anaemic GDP growth.”
Food, tobacco and alcohol saw the largest price increases, up by 2.6 per cent over the same period. Having surged in September 2012, energy prices were comparatively muted this year, with a 0.9 per cent fall dragging the index downward.
Core inflation, which strips out the effects of the most volatile parts of inflation, dropped back to one per cent, and has been below two per cent since 2008.
In its most recent consultation on the euro area, the International Monetary Fund (IMF) warned of deflationary pressures, highlighting the eventual tapering of quantitative easing in the US as a further risk to the currency union.
Timo del Carpio of RBC Capital Markets said the news favoured the status quo at the European Central Bank: “Draghi is likely to continue talking soft on the outlook, for both the economy and for inflation.”