Other editions: Mobile | News Feeds | E-Newsletters | Electronic Edition Find it: Jobs | Cars | Real Estate | Apartments | Shopping | Classifieds  
 
POWERED BY YOU AND  
HOME     NEWS     COMMUNITIES     SPORTS     MULTIMEDIA     LIFE    WEATHER     OPINION     OBITUARIES     CLASSIFIEDS     CUSTOMER SERVICE  

Nation/World
Local News
Local Business
Technology
Aug 29, 5:53 AM EDT

Worrying eurozone inflation sags again to 0.3 pct


AP Photo
AP Photo/Bodo Marks
World Video

Buy AP Photo Reprints
Multimedia
A district summary of the Beige Book
Measuring economic stress by county nationwide
Mall malaise: shoppers browse, but don't buy
Unemployment by the numbers
Family struggles with father's unemployment
Saying an affordable goodbye
Hard times hit small car dealer
Latest Economic News
Worrying eurozone inflation sags again to 0.3 pct

Japan economy stalls as incomes, spending languish

Obama touts revised economic growth numbers

US economy grew at brisk 4.2 pct. rate in Q2

Survey: Americans' pessimism on economy has grown

German unemployment ticks up slightly in August

US economy forecast to grow by 1.5 percent in 2014

Afghanistan's one-time booming war economy slows

AP survey: Fed's outlook correct but not solution

Survey: Economists say Fed is on 'the right track'

Interactives
Greece's Debt Threatens to Spread
State budget
gaps map
Auto industry problems trickle down, punish Tennessee county
Women give old Derby hats a makeover in tough economy
S.C. town deals with highest unemployment in South
How mortgages were bundled and sold as securities
Tracking the $700 billion financial bailout
Tracking the year's job losses
State-by-state foreclosures since 2007
Credit crisis explained
Presidents and their economic legacies
Lexicon of the financial crisis
Americans' addiction to debt

FRANKFURT, Germany (AP) -- Inflation in the 18 countries that use the euro sank to 0.3 percent in August, a worrying sign of economic weakness that is putting pressure on the European Central Bank to take more drastic steps to keep a weak recovery from stalling completely.

Eurostat, the EU statistics agency, said Friday the figure is down from 0.4 per cent in July, as expected by market analysts. Core inflation, which excludes volatile food and energy, sent a modestly brighter signal as it rose to 0.9 percent from 0.8 percent.

The low inflation figure comes amid increasing worry about the health of the European economy, a major pillar of the global economy with some 17 percent of world annual output. The eurozone showed no growth in the second quarter as fears about the Ukrainian crisis weighed on consumers and investment decisions. Unemployment remained high at 11.5 percent in July, unchanged from the month before.

ECB President Mario Draghi has warned that inflation expectations are worsening and says the bank, the top monetary authority for the eurozone, will add more stimulus if needed.

Many analysts predict the ECB will launch large-scale purchases of financial assets to pump more money into the economy. The bank's governing council meets on Thursday, but many experts think it will hold off for several more months as it waits for earlier stimulus efforts to show effect. The bank has already taken steps to boost growth and prices, cutting in June its key interest rate to 0.15 percent and offering cheap loans to banks on condition they lend more to companies.

Consumers like low inflation because it makes their paychecks go further in stores. But it is a sign of overall weak demand. And it has been so low for so long that it has raised fears of deflation, a crippling downward price spiral that comes about when people hold off buying things because they think prices will fall further.

Europe's economy grew for four quarters but then the recovery came to a halt in the second quarter of this year as core economies France and Germany stalled. Most economists predict growth will resume in coming quarters but it is feared that uncertainty over the crises in Ukraine and the Middle East will keep the recovery too weak to reduce high unemployment.

Draghi has said that if needed the bank could make large-scale purchases of financial assets, known as quantitative easing, or QE. That step adds newly created money to the economy and in theory can lower longer term borrowing costs for companies and increase the rate of inflation.

By considering more stimulus, the ECB is leaning in the opposite direction from that of the U.S. Federal Reserve, which is expected to halt its asset purchases later this year as the U.S. economy grows more strongly.

© 2014 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed. Learn more about our Privacy Policy and Terms of Use.


Terms of Service | Privacy Policy | Contact Us | About Us | Work for Us | Subscribe
All rights reserved.
Users of this site agree to the Terms of Service and Privacy Policy/Your California Privacy Rights (Terms updated March 2007)