Martin Santa Brussels
Euro zone inflation fell as expected last month to its lowest rate in three-and-a-half years as inflationary pressures continued to ease amid a weak economic recovery and shy domestic demand.
The rate of consumer price inflation in the 17 countries using the euro fell to 1.1 percent year on year in September, its lowest since February 2010 when it stood at 0.8 percent, the EU’s statistics office, Eurostat, said yesterday.
The reading was down from 1.3 percent in August and was well below the European Central Bank’s (ECB’s) official target of an inflation rate of close to but below 2 percent.
Prices rose 0.5 percent from August, as a 0.4 percent drop in costs of food, alcohol and tobacco products and a 0.9 percent decline in prices of services were offset by a 3.4 percent jump in prices of non-energy industrial goods.
Volatile prices of energy were up by 0.5 percent on the month in September.
ECB executive board member Peter Praet said on Tuesday that inflationary pressures remained subdued in the medium term, including 2015.
The low inflation environment allows the ECB to keep an ultra-loose policy stance with the main refinancing rate at a record low of 0.5 percent. The ECB repeated that it stood ready to react if the economy needed a further policy boost.
With slow inflation, economic optimism brightened for the fifth month running in September, jumping to a two-year high on the back of improving confidence across all sectors. The sentiment confirmed the recovery was under way.
In a separate data release, the Eurostat said the bloc’s foreign trade surplus grew to e7.1 billion (R95.3bn) in August from a e4.6bn surplus a year earlier, as exports fell by 5 percent, while imports were down 7 percent year on year. – Reuters