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Eurozone relapses into deflation in August

Eurozone relapses into deflation in August

The euro zone announced today the inflation data in the region for the month of August, which showed a negative reading and the fall of the euro area into deflationary zone, in light of the slowdown in the economic recovery of the euro area after the Corona crisis.

The annual consumer price index fell by 0.2%, the first decline since May 2016, less than the previous reading, which had indicated a rise of 0.4%. Expectations were also for a rise of 0.2%.

Prices for both energy products decreased by -7.8% against -8.4% in July, and non-energy industrial goods decreased by -0.1% versus an earlier rise of 1.6%.

At the same time, inflation in the services sector slowed to 0.7 percent, compared to 0.9 percent, as food, alcohol and tobacco increased by 1.7 percent versus 2.0 percent.

The annual core index, which excludes volatile prices for energy, food, alcohol and tobacco, increased by 0.4%, less than a previous rise of 1.2%, and expectations were for a rise of 0.9%.

Despite this decline in inflation rates, the euro continued to rise for a third consecutive session against the dollar, to hit its highest level since May 2018 at 1.1996.

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