Euro area inflation was higher than initially forecast in August, easing pressure on the European Central Bank after it took action to shield the region from the threat of a downward spiral in prices.
Annual inflation was 0.4 per cent, unchanged from July, the European Union’s statistics office in Luxembourg said today.
That’s above Eurostat’s earlier estimate of 0.3 per cent, which was the lowest reading in almost five years.
The ECB, which aims to keep inflation at just below 2 per cent over the medium term, announced earlier this month that it would expand unconventional policy measures with a plan to buy privately owned securities, while stopping short of fully- fledged quantitative easing.
“Inflation is still a story of low energy prices, low food prices and not so much yet a threat or real outright deflation,” said Carsten Brzeski, chief economist at ING-Diba in Frankfurt.
“On the other hand, the ECB right now isn’t blind to the headline inflation data.”
Falling energy prices are the main reason keeping consumer prices low, today’s data show. The cost of energy decreased 2 per cent from a year earlier after having fallen 1 per cent in July.
Core inflation, which strips out volatile items such as energy, food, tobacco and alcohol, stood at 0.9 per cent, up from 0.8 per cent the previous month. The cost of services rose 1.3 per cent, matching the July reading.
Bloomberg
