Published On: Tue, Jan 24th, 2017

Eurozone inflation remains weak in the coming years

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DraghiInflation in the Eurozone will remain weak in the coming years, suggesting that the European Central Bank (ECB) is still far from reducing unprecedented quantitative easing program and measures to stimulate the economy. The core inflation rose to 1.1% in 2016, which is half of the target of the regulator. The forecasts of the European Central Bank are the index to rise to 1.3% in 2018 and 1.5% in 2019.

ECB left unchanged the quantitative easing program on last meeting, claiming that the recent spike in consumer prices is only temporary and is due almost entirely to the rise in oil prices.

“At the core inflation, which excludes prices of food and fuel, there is no decisive trend”, said the European Central Bank in its report.

Eurozone inflation in December reached a growth of 1.1%, according to preliminary data of Eurostat. In November the growth of consumer prices was within 0.6%. This is the highest inflation rate since September 2013 and above market expectations of 1%.

The expected average inflation this year to accelerate to 1.4% by speeding up marginally to 1.5% in 2018 and by 2021 will increase to 1.8%, indicate the report.

According to the ECB President Mario Draghi the threat of deflation in the Eurozone largely disappeared.

“There is a need for a significant degree of relief in monetary policy in order to build up pressure in favor of inflation in the medium term”, said Mario Draghi. “It is important to explain that the recovery of the Eurozone is in the interest of the German citizens”, he added.

The inflation is far from the purpose of the ECB of years, Ireland is in deflation, while Cyprus, Greece and Italy are close to zero growth in consumer prices. This illustrates that the bloc is far from full recovery from one of the worst financial crises in decades.

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