FRANKFURT—Spanish consumer prices unexpectedly fell from a year ago and German inflation edged below 1%, suggesting the euro zone is edging closer to a paralyzing bout of extremely low inflation, or even broad-based price declines known as deflation. The inflation figures from two of the blocs four-largest economies put further pressure on European Central Bank officials to consider fresh stimulus measures when they meet Thursday, including negative rates on bank deposits. Annual inflation in the euro zone was 0.7% in February, and the reports from Germany and Spain suggest it could weaken to as low as 0.5% when data for the entire bloc are released Monday. The ECB targets inflation of just below 2%. Weak consumer prices appear to be filtering through to household and business expectations for future inflation trends. According to a monthly report from the European Commission, businesses reported a drop in their expected selling prices and consumers expected prices to rise less rapidly over the coming 12 months.
Posted on: Fri, 28 Mar 2014 17:08:46 +0000
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