Deflation, low consumer confidence hit eurozone – report
October 5, 2015, 3:06 pm

Will the latest dismal data on the eurozone’s deflation prompt an increase in the ECB’s quantitative easing? [Xinhua]

In September, the index fell from 18.4 a month earlier to 13.6.

Even economic powerhouse Germany appears to have suffered as its index fell from over 25 in August to 17.6 in October, the Sentix think tank report said.

The latest figures could put pressure on the European Central Bank (ECB) to increase its quantitative easing stimulus program which began last March.

The Sentix report comes less than a week after the European Union’s statistics bureau Eurostat said that inflation in the 19-member eurozone had fallen into negative territory for the first time in six months to -0.1 per cent in September.

It stood at 0.1 per cent in August.

Another Eurostat report released last week showed that seasonally adjusted unemployment in the eurozone held steady at 11 per cent in July and August.

In August 2014, unemployment was 11.5 per cent. Although the latest figures show improvement year-on-year, the difference is nearly negligible over 365 days and could mean that stimulus programs launched by the ECB are not working quickly enough to pull the continent out of deflation and recession.

The highest unemployment rates were recorded in Greece at 25.2 per cent and Spain at 22.2 per cent in June.

All these figures are dismal; the ECB has always maintained that a two per cent inflation rate across the 28-member bloc (eurozone and non-euro countries) was ideal to spur economic growth.

“Compared with July 2015, annual inflation fell in fourteen Member States, remained stable in four and rose in ten,” a Eurostat report in September said.

Meanwhile, the euro fared stronger against the dollar and pound sterling on Monday, boosted by Wall Street’s positive market performance on Friday and the fact that US non-farm payroll new employment figures had fallen dramatically in September.

The BRICS Post with inputs from Agencies