Unchanged German inflation puts further pressure on ECB to act

Thursday 28 August 2014 17.58
Inflation across the euro zone remains below the ECB target rate of 2% and the 'danger zone' of 1%
Inflation across the euro zone remains below the ECB target rate of 2% and the 'danger zone' of 1%

Annual inflation in Europe's largest economy, Germany, held steady in August, new data indicates. 

It suggests there's still a risk that the euro zone rate will fall and it increases the dilemma for the European Central Bank over whether to take action.

Preliminary data from the Federal Statistics Office showed consumer prices rose by 0.8% in the month.

It's well below the ECB's inflation target of just below 2% for the euro zone.

Preliminary inflation data for the single currency bloc, due tomorrow, is forecast to show the annual rate slowing to 0.3% from 0.4% - already its weakest level since October 2009.

That outcome would boost the chances of further ECB measures being introduced to target low inflation.

Data published earlier showed Spanish consumer price inflation came in at minus 0.5%, lower than in July, and Belgian annual inflation fell to its lowest level since November 2009 this month.

With inflation in what the ECB considers a "danger zone" of below 1%, the central bank cut interest rates to record lows in June and launched a series of measures to pump money into the sluggish euro zone economy.

Economists generally said the ECB would likely wait to see the impact of these measures before announcing further action despite the low inflation readings published on Thursday.