Eurozone inflation static as unemployment hits high
Inflation in the Eurozone remained steady for the third straight month in July, offering little comfort to consumers at a time when the number of people out of work continues to climb and the unemployment rate hit a record high.
Consumer prices in the 17 nations sharing the euro rose 2.4 per cent in July on an annual basis, the EU’s statistics office Eurostat said on Tuesday, maintaining a level first touched in May as Brent crude fell sharply and brought prices down. The bloc’s jobless rate, in a separate report, hit 11.2 per cent.
Inflation is seen coming into line with the European Central Bank’s target of just below 2 per cent by the end of the year, unless oil prices rise sharply, and ECB President Mario Draghi said in early July the rate is slowing faster than forecast.
The lack of pressure on prices has given the ECB, which has a mandate to maintain price stability in the Eurozone, some room to move. The bank cut its interest rate 0.25 point to a record low of 0.75 per cent and its deposit rate to zero in July.
The ECB’s August meeting this Thursday, typically a low-key affair during the European summer, will be intensely watched for any signs that Draghi is willing to do more to help reduce the high cost of money for governments and banks in Spain and Italy.
Draghi surprised investors last week by saying the bank was “ready to do whatever it takes to preserve the euro”, but it is unclear whether major new steps will be announced soon or later this year.