Brussels, 31/07/2014 (Agence Europe) - Inflation fell to 0.4% in July in the eurozone from 0.5% in June, according to initial estimates published on Thursday 31 July by the EU's statistical office, Eurostat.
Inflation is growing at its slowest rate since October 2009, when inflation in the eurozone hit negative territory as prices fell by 0.1%, explained a Eurostat spokesman.
The new fall in inflation has revived fears of deflation and a vicious circle of falling prices and pay, a prospect that has been haunting some member states for months. The European Central Bank took measures to deal with this in June, reducing the main euro interest rate from 0.25% to 0.15%, and announcing a package of exceptional measures to encourage banks to lend more to households and the real economy. The ECB's aim is to ensure price stability and keep inflation at just below 2%, but inflation has been very low for months, below the 1% level viewed as risky by the bank.
In July, it was falling energy prices that most influenced the level of inflation. Energy prices fell by 1% after a rise of 0.1% in June. Food, alcohol and tobacco prices fell by 0.3%, following a 0.2% fall in June. Non-energy industrial goods prices remained unchanged (0.0%, following a fall of 0.1% in June). In a press release, Eurostat reveals that the only price increase was in services (up 1.3%, the same as in June). (LC)