{"id":24216,"date":"2015-02-02T19:43:54","date_gmt":"2015-02-02T18:43:54","guid":{"rendered":"http:\/\/www.w-t-w.org\/en\/?p=24216"},"modified":"2015-02-02T19:46:47","modified_gmt":"2015-02-02T18:46:47","slug":"deflation-in-the-eurozone","status":"publish","type":"post","link":"https:\/\/www.w-t-w.org\/en\/deflation-in-the-eurozone\/","title":{"rendered":"Deflation in the Eurozone?"},"content":{"rendered":"

In January, prices in the eurozone were 0.6% down on their levels a year ago. The figure shows the eurozone heading deeper into deflationary territory from December, when prices were 0.2% down on the year before.<\/p>\n

A large contributor to falling prices is the cost of energy, with oil prices down almost 60% on the middle of last year,\u00a0 Energy prices plunged 8.9% in January.<\/p>\n

If food and energy are stripped out of the calculations, eurozone prices were still rising at an inflation rate of 0.5%, down from 0.7% the month before.\u00a0 The eurozone has only once before experienced deflation at these levels, in July 2009, as the region first went into recession following the financial crisis.<\/p>\n

Last week the European Central Bank (ECB) launched a programme aimed at pushing prices back up – known as quantitative easing – through which it injected around 1 trillion euros into the economy.<\/p>\n

Was it energy prices that have pulled the eurozone into deflation? While cheaper energy is welcome news for a net importer of the stuff, as the eurozone is, the danger of a period of wider and potentially more damaging deflation is there. Debt is probably the big issue.<\/p>\n

So the European Central Bank president Mario Draghi will no doubt see these figures as supporting the decision last week to launch a programme of quantitative easing intended to push inflation higher.\u00a0 Still, other new data show that a period of deflation doesn’t necessarily mean an economy can’t grow.\u00a0 In Spain, where prices were falling for much of last year, the economy grew at a respectable 0.7% in the last quarter of 2014.<\/p>\n

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Deflation across the 19 countries that use the eurozone currency is gathering pace.<\/p>\n

Christian Schulz, senior economist at Berenberg Bank said the latest figures showed that “the ECB was … more than justified in taking aggressive action earlier this month.\u00a0 There was better news on eurozone unemployment, which fell to 11.4% in December, down from 11.5% in November.<\/p>\n

Within that figure there are huge differences between jobless levels in different countries.\u00a0 Germany has a 4.8% unemployment rate. But 25.8% of Greece’s labour force is out of work and Spain’s jobless rate is 23.7%.<\/p>\n

\"Eurozone<\/a><\/p>\n<\/div>\n<\/div>\n<\/div>\n

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In January, prices in the eurozone were 0.6% down on their levels a year ago. The figure shows the eurozone heading deeper into deflationary territory from December, when prices were 0.2% down on the year before. A large contributor to … Continue reading →<\/span><\/a><\/p>\n","protected":false},"author":22,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"footnotes":""},"categories":[13],"tags":[],"class_list":["post-24216","post","type-post","status-publish","format-standard","hentry","category-finance"],"aioseo_notices":[],"aioseo_head":"\n\t\t\n\t\n\t\n\t\n\t\n\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t