(Bloomberg) — A slump in euro-area consumer prices eased in March, offering respite to the European Central Bank after it ramped up stimulus to fend off a deflation threat.
The annual rate of inflation in the 19-nation bloc climbed to minus 0.1 percent from minus 0.3 percent in February, the European Union’s statistics office in Luxembourg said on Tuesday. That’s the fourth consecutive reading below zero and in line with the median estimate in a Bloomberg survey. Unemployment fell to 11.3 percent in February from a revised 11.4 percent the previous month.
The Frankfurt-based ECB pledged to buy 1.1 trillion euros ($ 1.2 trillion) of assets including government bonds through September 2016 to fend off deflation. ECB President Mario Draghi, who pushed the program through against resistance from Germany, has already signaled that he expects victory and presented forecasts showing inflation back in line with the bank’s mandate of just below 2 percent in 2017.
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“The inflation rate is set to rise again over the course of the year, mainly because oil prices will start increasing at some point as well,” said Marco Wagner, an economist at Commerzbank AG in Frankfurt. “The latest ECB measures might of course have an effect as well, but it’s probably minor.”
Bundesbank President Jens Weidmann, who opposed the program, has argued that consumer prices would pick up anyway as the drop in energy costs adds to previous ECB action in stimulating the economy.
Core inflation in the euro area slowed to 0.6 percent in March from 0.7 percent, according to today’s report. Energy prices fell 5.8 percent after a 7.9 percent decline in February.
Economists surveyed by Bloomberg forecast euro-area consumer prices will remain unchanged this year before rising 1.2 percent in 2016. The ECB also projects stagnating prices for 2015 and sees inflation at 1.5 percent in 2016 and 1.8 percent in 2017.
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In Spain, where the inflation rate has been below zero for nine months, the slump in consumers prices moderated in March after hitting a record low of minus 1.5 percent in January. In Germany, the rate turned positive for the first time in three months as a recovery in the region’s largest economy gathers momentum.
To contact the reporter on this story: Stefan Riecher in Frankfurt at [email protected]
To contact the editors responsible for this story: Fergal O’Brien at [email protected] Jana Randow, Paul Gordon
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