Euro prices in fresh decline
EUROZONE consumer prices fell in August for a third consecutive month, though the rate of deflation narrowed significantly from July and economists predicted prices would start to rise again within months.
Consumer prices fell by 0.2 per cent year-on-year in August, down from the 0.7 per cent decline the Eurozone countries experienced in July.
But economists said the fall was primarily due to rising oil prices, which recently recovered to a ten-month high of around $75 a barrel.
“It seems highly probable that July marked the deepest deflation in the Eurozone and consumer prices will turn positive year-on-year within the next couple of months,” said Howard Archer, chief UK and European economist at IHS Global Insight.
Clemente de Lucia, an economist at BNP Paribas, also expects inflation to rebound in the last quarter of the year.
“Starting from August, energy base effects should begin to push inflation higher,” he said.
But though France and Germany came out of recession in the second quarter, economists agreed economic pressures would keep Eurozone inflation muted for the foreseeable future.