The slump in oil prices also sends the consumer prices in the euro area is plummeting. For the first time since the severe economic crisis of 2009, the price level in December declined, as is evident from figures by the statistics office Eurostat on Wednesday. Thus, consumer prices were 0.2 percent lower than a year earlier. It is the first decline since October 2009. B ank economists had expected a decline of 0.1 percent.
The negative inflation is almost entirely due to massive fallen energy prices. They were 6.3 per cent lower than in the same month last year. But the oil prices have since last summer more than half. However, the prices of food and manufactured goods in December remained unchanged. Services were 1.2 percent higher than a year ago.
The European Central Bank (ECB) prepares the inflation for some time headaches. They feared damage to their credibility, if not more have expected her to achieve the medium-term price target of two percent. That an increasing doubts that show market expectations: The long-term inflation expectations of financial professionals have been declining for some time. In recent days they have fallen by 1.6 percent to a new record low.
ECB chief Mario Draghi has already sent strong signals for additional countermeasures. Other senior central bankers control in this direction: ECB Vice Vitor Constancio warned of a self-reinforcing downward spiral of falling prices and weak growth. ECB chief economist Peter Praet said the central bank could not simply ignore the fall in oil prices.
debate on deflation
Critics complain, however, that of deflation could be no question. Economists mean by deflation, a prolonged decline in prices, which focuses not only on individual product groups, but is broad. They worry that consumers will not buy less because they still have to wait until the goods are cheaper. But whether this concern is justified, is controversial. In addition, it is pointed out that inflation weakness is also a consequence of desirable austerity and reform measures in crisis stricken countries.
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specialists still expect the ECB soon in the mass purchase of private and government securities (quantitative easing ) goes in order to stem the decline in prices. There is disagreement about the time at best. More and more bank economists expect a response already at the next rate-setting meeting on 22 January.
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