Inflation in the Eurozone rose by only 0.2% mom and 0.8% yoy in August; disappointing analysts who had expected a 0.3% rise and 0.9% rise respectively.
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The ECB has been using negative interest rates and quantitative easing in an attempt to increase activity and push inflation back towards its target of just below 2%. Germany’s statistics agency reported Wednesday that retail sales were up 1.7% in July from June, the largest increase since January 2014.
“Looking at the main components of euro area inflation, food, alcohol & tobacco is expected to have the highest annual rate in August (1.3%, compared with 1.4% in July), followed by services (1.1%, compared with 1.2% in July), non-energy industrial goods (0.3%, compared with 0.4% in July) and energy (-5.7%, compared with -6.7% in July)”, Eurostat said in a release.
The ECB has been buying 80 billion euros ($89.2 billion) worth of assets a month to pump money into the economy.
The measures now being implemented by the European Central Bank are created to try and boost stalling inflation, as well as growth, within the eurozone.
Analysts said the inflation and unemployment figures would be discussed when the European Central Bank meets to discuss policy options next week.
Economists note that the drop in oil prices should get phased out of the inflation data in coming months, helping inflation edge up.
Unemployment has remained stubbornly high in the eurozone since the financial crisis. Analysts don’t expect more stimulus at the ECB’s September 8 policy meeting, but don’t rule out more in coming months if inflation doesn’t pick up.
As with the Bank of England, the ECB aims for a rate of two per cent.
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Speculation has been on the rise that the European Central Bank will need to take more easing measures at its next monetary policy meeting on September 8.
