Eurozone deflation accelerates
January 30, 2015
The EU statistics office, Eurostat, reported Friday that consumer prices in the 19 countries using the euro had fallen 0.6 percent on a year-to-year basis in January, down from minus 0.2 percent in December.
According to Eurostat's flash estimate for the month, the negative rate of annual inflation was primarily driven by falling energy prices, which had slumped 8.9 percent - an acceleration from 6.3 percent in December.
Prices for food, alcohol and tobacco, as well as non-energy industrial goods - both down by 0.1 percent - also increased the pace of the slide. Only the services sector still saw prices rising, with the growth there, however, slowing too.
The declines are set to further fan fears of a deflationary spiral which could send prices on a downward slope, thus hurting investment, job creation and subsequently growth in the currency area.
The specter of deflation caused the European Central Bank (ECB) last week to unveil a stimulus plan, including sovereign and private asset purchases to the tune of 60 billion euros ($68 billion) per month until September 2016. The move is intended to kickstart the eurozone economy and, subsequently, inflation by pumping the money into the banking sector on hopes it will trickle down to the real economy.
Unemployment declining slightly
Also on Friday, Eurostat published its latest unemployment figures, showing the overall rate in the eurozone falling slightly from 11.5 percent in November to 11.4 percent in December.
In the wider 28-nation European Union, joblessness had dropped below 10 percent for the first time in just over 3 years, Eurostat said.
On balance, 24.056 million people in the bloc were out of work in the month, some 18.12 million of whom were living in the euro currency area.
Eurostat uses an International Labour Organization (ILO) standard to calculate unemployment, which in December showed Germany enjoying the lowest rate at 4.8 percent. According to the German tally, the rate was at 6.9 percent in the month.
Joblessness was most rampant in Greece, at 25.8 percent, to be followed by Spain at 23.7 percent.
uhe/ng Reuters, dpa, AFP, AP)