Agency Reform | Wednesday January 7, 2015 | 21:29 hrs
the Brussels, Belgium-eurozone prices fell 0.2 percent in the annual reading of December, according to a first estimate of the statistical agency of the European Union, Eurostat Union.
The decline in prices in the area of 18 countries without having to Lithuania, which joined this month- was sharper than expected.
The market consensus expected a fall 0.1 percent in December from the same month last year.
This is the first time that inflation is negative in the euro area since October 2009, when it declined by 0.1 percent.
If this behavior continues, the euro zone will fall into a period of deflation, a phenomenon of prolonged and widespread price and wage discourages consumption and low activity.
The decrease was mainly due to a fall in energy prices, which was 6.3 percent in December.
The decline in oil prices are moving to what consumers pay at the pump.
In fact, core inflation, excluding volatile energy prices and unprocessed foods, remained stable at an annual rate of 0.7 percent.
The prices of food, alcoholic beverages and snuff reported no change and industrial goods without energy.
The only annual upward trend concerns the services with 1.2 percent, stable compared to the result of November.
The data from Eurostat puts more pressure on the European Central Bank (ECB) to implement a program to buy sovereign bonds.
The institution, whose prerogative is to maintain a medium-term rate below but close to 2 percent inflation, could introduce new monetary policies modeled conducted the US Federal Reserve (Fed) the recent years: the “quantitative easing,” or QE, consisting of injecting liquidity into the financial system to stimulate activity.
The ECB, worried about a prolonged low inflation in the block and possible risks of deflation period, you are ready to print money, buy sovereign bonds in the secondary market and inject more liquidity into the economy to stimulate demand and encourage a rise in prices.
Economists expect the body to make the decision to establish the bond purchase program at its next meeting on January 22.
The ECB president, Mario Draghi, has recently suggested that soon could advertise something related to lower pressure on prices in the euro area.
“These are really desperate times for the eurozone, with the finally block falling into deflation,” Dennis de Jong, director of UFX.com said. “Draghi can not afford to continue to do nothing and presentation of a bond purchase program of quantitative easing later this month seems increasingly likely.”
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