Eurozone economy enters deflation
In spite of all the warnings and the predictions to the contrary, the eurozone economy slipped into deflation in December, according to estimates published by Eurostat today (7 January).
It estimated that inflation in the eurozone in December was -0.2%, dragged down in particular by falling oil prices. Energy costs fell by 6.3% in December.
The reading will put further pressure on the European Central Bank (ECB) to launch fresh monetary measures and in particular a programme of quantitative easing. Its next decision-taking meeting is scheduled for 22 January.
Under such a programme, trialled successfully by the central banks of the United States, Japan and the United Kingdom over the last few years, the ECB would buy up government bonds, injecting money into the eurozone economy with the aim of pushing up growth and inflation.
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