Consumer prices in the euro area fell by 0.2 percent in August, up 0.4 percent a month earlier. According to the European statistical office Eurostat in its quick estimate. Inflation has been negative for the first time since 2016, at a time of coronavirus constraints and economic impacts. The quick estimate does not include data for the entire European Union.
Analysts in a Reuters poll expected prices to rise by 0.2 percent year on year.
Eurostat noted that the gradual easing of measures in place against the spread of the new coronavirus, which reduced economic activity, continued in August. However, inflation has moved even further away from the European Central Bank (ECB), which wants to keep year-on-year price growth just below two percent than in previous months.
The bank has already taken a series of extraordinary measures this year to support the economy, which is facing the negative effects of the crisis. Last month, however, it left monetary policy, including interest rates, unchanged at its meeting.
The fall in energy prices, which fell by 7.8 percent year on year in August, had the most substantial effect on August’s overall deflation.
On the other hand, food, alcohol, and tobacco prices continued to rise, up 1.7 percent from August last year.