Eurozone inflation figure remains steady at 0.2 per cent

Eurostat has reported that the Eurozone inflation rate held steady at 0.2% in July.

The figure, which is well below the target of the European Central Bank (ECB), represented a big disappointment for backers of the monetary stimulus approach, which promised a swift answer to slow growth across the continent.

Eurostat, the statistical office of the European Union, announced the so-called “flash estimate” figure, which suggests that inflation is flat-lining.

Prices

The 19-country single currency zone based on the Euro fell into deflation earlier in the year, and falling prices have been compounding the problem. After a flat reading in April, prices rose by 0.3% in May and then a further 0.2% in June.

The successive rises had boosted hopes that manageable inflation was returning to the Eurozone, but the latest figures have put a damper on expectations.

Inflation now remains a long way off the ECB's target, which is around 2%, as prices fail to pick up the pace. The continued fall in global oil prices is a big factor, but other deflationary pressures are also playing a part.

Stimulus programme

The European Central Bank's 1 trillion euro stimulus programme was launched in March with a package of asset purchases. The ECB has now announced that the process will continue through the remainder of this year and into 2016.

Inflation rates usually mirror unemployment figures, and the seasonally adjusted 11.1% reported by Eurostat showed them holding steady.

Greece fared worst in this respect, with the country's continuing economic woes seeing more than a quarter (25.6%) of the working-age population unemployed in April.