Euro-Area Price Growth Slowed to Near-Standstill in August

  • Annual consumer-price inflation decelerates to 0.1% from 0.2%
  • Core inflation rate declines to 0.9% from 1% in July

Inflation in the euro area slowed almost to a standstill in August, adding to the challenges for the European Central Bank in its efforts to revive price growth in the region.

Consumer prices in the 19-nation currency bloc rose 0.1 percent in August compared to a year earlier, after 0.2 percent in July, the European Union’s statistics office in Luxembourg said on Wednesday. That reading is the lowest in four months, and compares to an initial estimate of 0.2 percent in August.

ECB President Mario Draghi said this month that the central bank is ready to expand its quantitative-easing program if a decline in oil prices and a slowdown in emerging markets were to worsen the inflation outlook. Vice President Vitor Constancio said in an interview published Wednesday that the ECB’s program is still much smaller than that of other central banks.

The euro extended losses after the report, trading at $1.1238 at 11:34 a.m. Frankfurt time.

Core inflation, which strips out volatile elements such as energy and food, slowed to 0.9 percent in August from 1 percent in July.

Prices in the euro area have been almost stagnant since the ECB started its 1.1 trillion-euro ($1.2 trillion) QE program in March. The inflation rate rose to 0.3 percent in May before slowing again in the following months.

The Frankfurt-based central bank revised its inflation forecasts downward on Sept. 3. It now predicts price growth at 0.1 percent in 2015 and at 1.1 percent in 2016.

“If the price of oil does not continue to go down -- it cannot go down indefinitely -- we will see a jump in inflation in the last quarter of this year,” Constancio said on Wednesday. “But we may have before that some months of negative inflation.”

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