Brussels, 29/08/2014 (Agence Europe) - The risk of deflation has risen by a notch in the eurozone with annual inflation falling from 0.4% in July to 0.3% in August, according to a flash estimate released by the EU's statistical office, Eurostat, on Friday 29 August.
The main components of inflation were services, for which annual prices rose in August by 1.2% compared with 1.3% in July, and non-energy industrial goods, for which annual prices rose in August by 0.3% compared with 0.0% in July. The price of food, alcohol and tobacco fell by 0.3% in August, the same as in July, and the price of energy fell by 2.0% in August, compared with 1.0% in July.
“I don't think that the ECB via the monetary policy has the instruments to fight deflation, to be very frank”, said German Finance Minister Wolfgang Schäuble the day before in an interview with Bloomberg. He added: “Interest rates are at a historic low level. You can't solve the problem by lowering interests' rates. What we urgently need is investment, regaining confidence of investors, markets, consumers. Stick to what we have agreed and implement it”. He praised the pro-enterprise approach defended by the new French government. (MB)