Euro zone inflation stable at 0.8% in January

Monday 24 February 2014 10.39
New Eurostat figures ease concerns of deflationary pressure on growth
New Eurostat figures ease concerns of deflationary pressure on growth

Euro zone inflation held steady at 0.8% in January from the same figure in December, official data showed today, easing concerns of deflationary pressure on growth.

A second estimate from the Eurostat statistics office showed year-on-year inflation in the 18-nation euro zone dropping from 2% in January 2013 after falling steadily in recent months.

In the 28-nation European Union, inflation fell to 0.9% compared to 1% in December.

The data will ease pressure on the European Central Bank (ECB) over concerns about deflation and the need for a further easing of monetary policy. 

However, the Eurostat figures showed annual negative rates in Cyprus (-1.6%), Greece (-1.4%) and in Bulgaria (-1.3%). 

The highest rates were in Britain and in Finland, which each saw a 1.9% rise.

Tobacco registered the highest rise in January at 0.8%.

The figures came amid fears that disinflation could harm a growing but lacklustre recovery in the euro zone. Tough EU government austerity policies to combat the debt crisis have sucked demand out of the economy, pushing inflation way below the ECB's target of close to 2%.

Deflation - falling prices in real terms - can encourage consumers to put off buying goods in the expectation that if they wait, they will become cheaper.

That in turn weakens the economy as companies reduce output accordingly, hitting employment and demand, thereby setting off a downward spiral.