Eurozone Inflation Stabilized in August

quinta, 18 setembro 2014.

FRANKFURT — Estimated inflation in the eurozone was revised upward on Wednesday, tempering fears that the currency bloc is in danger of being caught in a destructive downward price spiral.

Eurostat, the European Union statistics agency, said that the annual rate of inflation in the 18 countries that use the euro was 0.4 percent in August and therefore unchanged from July. Eurostat had earlier estimated August inflation at 0.3 percent.

Inflation remains well below the European Central Bank’s official target of just below 2 percent. The revised figure for August suggests that inflation may have stabilized, but is unlikely to end a debate among economists about whether the eurozone is at risk of deflation — a broad, sustained decline in prices that is associated with depression and high unemployment.

Moderate inflation is regarded as healthy for economies, in part because it provides a cushion against deflation. When deflation takes hold, consumers delay major purchases because they expect prices to fall further. Corporate sales and profits suffer, which forces companies to lay off workers, creating a vicious circle of falling demand.

As Japan has illustrated, reversing deflation is extremely difficult, which is why many economists have watched falling inflation in the eurozone with alarm.

Another school of thought, though, says that falling prices are necessary for countries like Greece or Spain to regain competitiveness. The inflation rate in Greece was minus 0.2 percent in August and it was minus 0.5 percent in Spain, according to Eurostat, leading some economists to argue that the countries are already in a period of deflation.

Among eurozone countries, Estonia, Italy, Portugal and Slovakia also recorded negative inflation in August. The highest inflation rate was in Austria, at 1.5 percent. Finland, with inflation at 1.2 percent, was the only other eurozone country in which inflation exceeded 1 percent in August.

Among the 10 countries that are in the European Union but that do not use the euro, inflation ranged from minus 1 percent in Bulgaria to 1.5 percent in Britain.

Eurostat said that the biggest price increases were at restaurants and cafes, in rents, and in vehicle maintenance. The biggest price declines were in fuel, fruit and telecommunications services.

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