European inflation slips back amid signs of slowing economies

BERLIN - Price pressures in the 16-member eurozone eased in August, data released Wednesday showed, as the euro gained ground and energy costs slipped back.

The European Union’s (EU) statistics office Eurostat confirmed that annual inflation in the currency bloc slipped from 1.7 percent in July to 1.6 percent last month.

This left consumer prices below the European Central Bank’s two-percent inflation target. The August data was in line with forecasts.

Apart from the prospects of slowing economic growth across Europe, wages are also unlikely to fuel price pressures. Second-quarter employment stagnated in the eurozone, Eurostat said in a separate report.

Annual employment growth rate in both the eurozone and the broader 27-member EU slumped by 0.6 percent during the three months to the end of June, the statistics office said.

The subdued inflation data gives the ECB room to move on interest rates with most economists expecting eurozone borrowing costs to remain on hold possibly until the end of the next year.

The ECB’s benchmark refinancing rate has been on hold at a record low of one percent since May last year.

A year ago when the eurozone economy was struggling to shake off recession, prices were in negative territory.

Annual inflation in the EU came in at 2 per cent in August, down from 2.1 percent in July. A year earlier the rate was 0.6 percent.