Euro zone deflation eases, unemployment drops

Deflation in the euro zone persisted in March but the rate of decline slowed, further easing concerns that the economy faces a dangerous spiral of falling consumer prices.

Prices in the 19-nation euro zone were down 0.1% in March, less than the drop of 0.3% in February with low energy costs still impacting the cost of living, the EU statistics agency Eurostat said.

Prices had slumped 0.6% in January.

As in previous months, the decline was mainly driven by a steep fall in the prices of energy, which was 5.8% cheaper in March than a year earlier.

Core inflation, which excludes the volatile components of energy and unprocessed food costs, was 0.6% year-on-year, down from 0.7% in February and the same as in January.

The bottoming out of price falls is likely to be welcome news for the European Central Bank, which wants to keep inflation below, but close to 2% over the medium term.

It started printing money in March to inject more cash into the economy and make prices rise again.

Meanwhile, in another positive sign for the euro zone economy, Eurostat said euro zone unemployment fell to 11.3% of the workforce in February from an upwardly revised 11.4% in January – the lowest rate since May 2012.

Eurostat said there were 18.204 million people without jobs in the euro zone in February, 49,000 people fewer than a month earlier.

On Monday, Fitch ratings agency said a renewed euro zone debt crisis was the biggest risk to the global economy, even greater than unstable oil prices and despite the ECB’s quantitative easing programme.

Joblessness remained hugely varied across the 19 nation euro zone, with a record low in Germany and alarmingly high levels persisting in Spain, at 23.2%, and 26% in crisis-hit Greece, the highest rate in Europe.

Youth unemployment in Greece stood at a huge 51.2% and 50.7% in Spain.

The data for Italy, the euro zone’s third biggest economy, remained a worry with unemployment up to a high 12.7% in February and youth unemployment at 42.6%. French unemployment remained flat at 10.6%.

The biggest drops in unemployment were felt in small nations Estonia down to 6.2% from 8.4% a year earlier and Ireland, down to 9.9% from 12.1%.

Across the 28-member EU, unemployment stood at 9.8% in February, down from 9.9% in January and 10.5% a year earlier.

Leave a Reply

Your email address will not be published. Required fields are marked *