Eurozone inflation dips below one per cent

BRUSSELS (AFP) – Inflation in the eurozone fell below one per cent in September, data showed yesterday, just weeks after the European Central Bank (ECB) launched a fresh round of stimulus to boost the economy.

The rise in consumer prices in the 19-country currency bloc slowed to 0.9 per cent from one per cent the month before, the European Union’s (EU) Eurostat said in a statement and the lowest since November 2016.

The figure was below a forecast of one per cent by analysts surveyed by data company Factset and far from the ECB’s target rate of just below two per cent.

The weak prices come as a US-China trade war crimps the global economy, especially export powerhouses such as Germany where the key manufacturing industry is entering a slump. The eurozone’s closely watched core inflation, which strips out volatile energy and food prices, was at one percent for the month, Eurostat said.

At its September meeting, the ECB said it would lower a key interest rate further into negative territory and restart “quantitative easing”, a programme of government and corporate bond purchases.

The ECB hopes to boost lending, economic activity and push up inflation with the moves, although some members of its governing council believe conditions are not yet bad enough to justify the renewed intervention.

After the meeting German Central Bank Chief Jens Weidmann blasted the decisions in a newspaper interview, while ECB board member Sabine Lautenschlaeger resigned last week.

ECB President Mario Draghi on Monday reiterated that governments should spend more to help central bankers boost growth and inflation.

The European Central Bank building in Frankfurt. PHOTO: AP