Eurozone annual inflation remains stable at 0.5% in June

17th July 2014

Following the European Central Bank’s recent actions to stave off a period of deflation and boost economic growth in the Eurozone, the cost of living stabilised in the troubled region during June.

According to numbers from Eurostat, the statistical office of the European Union, annual inflation in the single currency region was held at 0.5% in June 2014, stable compared with May. However a year earlier the rate was 1.6%. Monthly inflation was 0.1% over the month.

European Union annual inflation was 0.7% in June 2014, up from 0.6% in May. A year earlier the rate was 1.7%.

Eurozone: Deflation threat

But throughout the month negative annual rates were observed in Bulgaria, at -1.8%, Greece with -1.5%, Portugal at -0.2% as well as Hungary and Slovakia, with both at -0.1%. The highest annual rates were recorded in the United Kingdom, at 1.9%, Austria, with 1.7% and Luxembourg at 1.2%. Compared with May, annual inflation fell in 10 member states, remained stable in four and rose in fourteen.

The largest upward impacts to Eurozone annual inflation came from tobacco which rose 0.08 percentage points, restaurants and cafés, up 0.07% and rents at 0.06%.

At the start of June ECB President Mario Draghi announced a series of measures to tackle the threat of deflation and stimulate growth. Deflation, which means a decrease in the general price level of goods and services typically stops consumers spending as they wait for prices to tumble further, which in turns harms economic growth.

In a bid to tackle the issue, Draghi not only cut the main refinancing rate by 0.1% to 0.15%, but also took the deposit rate into negative territory at, -0.1%. Given that this means that banks are now effectively being charged for leaving cash with the central bank, the ECB is hoping it will spur on bankers to lend more money to businesses and individuals.

1 thought on “Eurozone annual inflation remains stable at 0.5% in June”

  1. Noo 2 Economics says:

    “Deflation, which means a decrease in the general price level of goods” No it doesn’t – you have described disinflation.

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