2016-02-29 11:29:07
Consumer prices in the eurozone fell sharply in February to minus 0.2%, putting
more pressure on the European Central Bank.
The slide into deflation is a sharp reversal from the revised 0.3% increase
recorded in January.
It is the first fall in inflation since September when it shrank by 0.1%,
according to Eurostat.
Energy drove the decline, with prices down 8% in February compared to a 5.4%
slide in January.
The dismal figures have dashed hopes that ECB efforts to boost prices were not
working. That raises the chance of the bank announcing further stimulus
measures next month.
It has already announced a cut to its bank deposit rate, which remains in
negative territory.
ECB chief Mario Draghi insisted earlier this month the policies were working.
Nordea economist Holger Sandte said: "Deflation would be a disaster for the
euro area as the burden of high debt would increase. Therefore, the ECB will
continue easing monetary policy significantly.
"But no matter what the ECB decides to do on 10 March, inflation is likely to
hover around zero during the next few months before it picks up - if oil prices
behave well."
Economic sentiment across the eurozone deteriorated more than expected in
February, according to research by the European Commission.
The Group of 20 (G20) finance ministers and central bankers agreed on Saturday
to use "all policy tools, monetary, fiscal and structural - individually and
collectively" to renew growth.