The latest bout of falling prices across the 19-country eurozone has ended- after just a single month.
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Capital goods rose by 3%, intermediate goods by 1.9%, durable consumer goods by 0.8% and non-durable consumer goods by 0.7%, while energy production dropped 5.2%.
European seasonally adjusted industrial production fell by 0.8 percent in February in the euro area (EA19) and by 0.7 percent in the EU28, according to estimates from Eurostat, the statistical office of the European Union.
Energy output also fell by 1.2% in February, production of durable consumer goods, such as fridges, decreased by 0.4% and output of capital goods, such a machinery, declined by 0.3%.
A decline in output during February had been expected since figures released by Eurostat last month had shown that eurozone industry recorded its strongest month for more than six years during January. If output doesn’t fall dramatically in March, the sector, which accounts for around 20 percent of eurozone economic output, will make a positive contribution to first-quarter economic growth across the region.
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. Since then, oil prices have recovered, and trading around a third higher since then. That new package has been widely criticized in Germany, where the government argues low growth can’t be countered by monetary and fiscal stimulus, but can only be addressed by long-overdue economic overhauls, such as those recommended by the IMF.
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Still, quarterly growth at that rate may not be so bad given the uncertainties that haunted the global economy in the first quarter, particularly the volatility in financial markets, which saw stocks around the world take a hammering and oil prices slide to 13-year lows. If that were the case, it would underpin expectations that the eurozone economy is set to grow at roughly the same modest pace this year as it did last, despite weaker demand for its exports from China and other large developing economies.
