Eurozone inflation rate revised up to zero in March


LONDON (AP) — The latest bout of falling prices across the 19-country eurozone has ended— after just a single month.

Revised figures Thursday from the European Union’s statistics agency showed that inflation was flat in the year to March. That’s up from the initial estimate of a 0.1 percent fall and February’s 0.2 percent annual drop.

Eurostat said the biggest upward contributor to inflation came from restaurants and cafes while fuel prices had the largest downward impact.

The upward revision is likely to cheer policymakers at the European Central Bank, who have backed a series of stimulus measures, such as cutting the main interest rate to zero and expanding a government bond-buying plan, primarily to get inflation back to the target of just below 2 percent.

The ECB has been worried that too-low or negative inflation could turn into deflation, a long-term drop in prices that would weigh on the already-fragile eurozone economy.

A consistent drop in prices can choke the life out of an economy mainly by enticing consumers to delay big purchases beyond everyday needs such as food and energy in the knowledge that they will cost less down the line.

And faced with lower prices, businesses also make less profit and start looking to reduce costs. That means job losses, wage cuts and a growing reluctance to invest and innovate. That hurts the economy further, potentially creating a downward spiral in which businesses have to cut costs further.

One of the drags on inflation over the past year has been the fall in oil prices — which hit 13-year lows in February. Since then, oil prices have recovered, and trading around a third higher since then. That should, all other things being equal, help push up inflation.

The ECB hopes that rising wages and expectations of higher prices will start to push up inflation.

Here again there was some positive news. The core rate, which strips out energy and the other supposedly volatile items of food, alcohol, and tobacco, picked up to 1 percent in the year to March from 0.8 percent the previous month.


Please let us know if you're having issues with commenting.