Data released Monday shows Greece and Cyprus trailing as eurozone consumer inflation once again slowed to its lowest ever annual pace in February, matching a figure that in November caused an unexpected interest rate cut by the European Central Bank (ECB).
Updated Eurostat data showed that the annualized inflation rate in the 18 eurozone countries slowed to 0.7 percent in February from 0.8 percent in January, the slowest rate since the monetary union was founded in 1999. The last time inflation slumped to this rate, in October, the ECB had to cut the key interest rate to new record low of 0.25 percent the following month.
The slight increase in the overall price index was driven by a 0.5 percent rise in prices of services and a 0.4 percent increase in costs of non-energy industrial goods.
The prices of food, alcohol and tobacco fell by 0.1 percent, while the highly volatile price of energy rose by o.1 percent.
ECB President Mario Draghi said last Thursday that the bank will take further measures to prevent the possibility of deflation in the eurozone caused by a strengthening euro weighed on prices.
Mr. Draghi estimated the possibility of deflation to be slim, but highlighted that risk rises the longer the inflation remains at low levels.
Four eurozone countries recorded negative inflation rates in February. Portugal and Slovakia registered annual inflation of –0.1 percent, while Greece saw –0.9 percent deflation and Cyprus –1.3 percent. The ECB, despite its predictions for low inflation for the forthcoming years, left interest rates on hold this month.
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