In a report, Eurostat said consumer price inflation rose by a seasonally adjusted 0.2% this month, compared to forecasts for an increase of 0.3%, and following a final reading of a 0.2% advance in June.
Advertisement
Energy prices are expected to decline 5.7% over the year with the rate for non-energy industrial goods at 0.3% from 0.4% in July.
Core inflation – which strips out energy – was down to 0.8% from 0.9%, below estimates for it to remain unchanged.
French shares gained momentum after a weak start Wednesday, as banks rallied, Iliad and Bouygues posted better-than-expected first-half results, and weak Eurozone inflation data added to the pressure on the European Central Bank (ECB) to take further stimulative action.
Inflation is a key indicator as it reflects underlying consumer demand in the economy and the figures have been well off the ECB’s target of around 2.0 per cent for several years.
There are now mounting calls for governments to introduce fiscal stimulus measures to help stimulate the economy.
The ECB has stepped up its programme of quantitative easing, and is now buying €80bn worth of bonds a month.
As with the Bank of England, the ECB aims for a rate of two per cent. Some say it’s only a matter of time, particularly if inflation doesn’t pick up this year.
“We expect inflation will remain muted in coming months”, said Barbara Teixeira Araujo, an economist at Moody’s Analytics.
Separate Eurostat data showed that eurozone unemployment was unchanged at 10.1% in July, the latest month for which figures are available for all 19 countries that use the euro. And with the U.K.’s decision to leave the European Union threatening to slow the eurozone’s modest recovery further, the ECB has indicated it may have to provide yet more stimulus to meet its objective.
Advertisement
“With [the] survey data also pointing to a marked slowdown in growth ahead, there is a strong case for the European Central Bank to announce further policy easing”.
