Brussels, Belgium (4E) – Inflation rate in the euro zone dropped in December, according to official data, down from November and revives concerns that weak inflation could put to risk the recovery in the currency bloc.
A preliminary reading of consumer prices in the 17-nation euro area showed that prices increased by just 0.8 percent in the 12 months ended December, according to the European Union’s statistics agency report released Tuesday, a drop in the annual inflation rate from 0.9 percent in November.
Inflation rate fell in October, when it dropped 0.7 percent, which prompted the European Central Bank (ECB) to slash its key interest rate to 0.25 percent, in an effort to boost the economy. The ECB’s inflation rate target is just below 2.0 percent.
The latest result increases concerns of possible deflation in the common currency area, in which consumers delay purchasing plans in expectation that prices will drop further.
ECB president Mario Draghi said last week there were was no need for another rate cut or there are no signs of deflation, but also said that it is critical that the rate of inflation will not stay below 1 percent.
A meeting by the ECB’s governing council is set on Thursday, though it is not likely that any action will be taken aimed to revive economic growth and inflation. The euro zone is expected to grow at a sluggish rate of 1.1 percent in 2014 and 1.5 percent in 2015, the ECB said.