Eurozone inflation remains stuck below zero

Annual inflation in the eurozone remained stuck below zero in March, defying analysts' forecasts and the European Central Bank's efforts to boost consumer prices in the 19-member currency bloc.

Consumer prices inched up to minus 0.1 per cent in March from minus 0.2 per cent, according to the preliminary estimate released on Thursday by the European Union's statistics office Eurostat.

Analysts had expected the March inflation rate to come in at zero.

Even at zero per cent, inflation would remain below the ECB's annual inflation target of just short of 2 per cent.

"March's flash eurozone CPI figures confirmed that price pressures in the currency union remain very weak and suggest that the ECB still has more work to do in order to meet its inflation target," said Jonathan Loynes, chief European economist at the Capital Economics group.

The release of the latest inflation data came after the ECB unveiled earlier this month a package of new monetary measures aimed at heading off the threat of deflation in the eurozone and firing up the region's tepid economic growth rate.

But gains in service sector prices as well as food, alcohol and tobacco could only slightly offset another sharp fall in energy costs, the Eurostat data showed.

Energy costs fell 8.7 per cent on the year in March after dropping 8.1 per cent in February following a drop in the oil price of more than 60 per cent over the last two years.

The ECB said this month that it expects inflation in the currency bloc to come in at a mere 0.1 per cent this year before accelerating to 1.3 per cent in 2017 and 1.6 per cent in 2018.

Last update: Fri, 24/06/2016 - 08:49

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