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Inflation

Eurozone inflation still in 'danger zone' in June

Annual inflation in the 18-member eurozone has remained at levels far too low to disperse protracted deflation worries in the bloc. Adjusted ECB forecasts see the problem lingering on for years.

Annual eurozone inflation remained at just 0.5 percent in June, initial figures from the EU statistics office, Eurostat, showed Monday.

The figure marked the ninth consecutive month that consumer prices stayed well below what the European Central Bank had called a "danger zone" of under 1 percent.

Rises in energy and services costs were easily offset by falling food, alcohol and tobacco prices, Eurostat noted.

No reason to panic

The ECB insisted that despite the June stagnation there was no acute risk of outright deflation in the 9.6-trillion euro ($13.1 trillion) economy, although three individual member countries had experienced deflation in May.

Deflation: When everything get cheaper

Analysts had penciled in a slight rise in the annual cost of living after the ECB cut interest rates to an historic low in an effort to tackle low inflation.

The bloc's central bank had lowered its long-term forecast for eurozone inflation, predicting that it would reach 1.4 percent in 2016, still off the bank's own target of below, but close to 2 percent.

hg/rs (dpa, Reuters)

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