Year-on-year inflation in the eurozone slowed to 0.7 per cent in February, compared to 0.8 per cent the previous month, the European Union’s statistics office Eurostat said Monday.
The figure is a revision from the initial Eurostat estimate that inflation would remain at 0.8 per cent in February, meaning that price growth dropped further-than-expected below the European Central Bank’s target of just under 2 per cent.
Year-on-year price growth first slowed to 0.7 per cent — the lowest reading since the creation of the euro in 1999 — in October of last year, prompting the ECB to intervene by lowering its key interest rate to 0.25 per cent the following month.
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Economists predict that the ECB is unlikely to respond as it did in November, however, since a slight pick-up in growth this year is expected by policy makers to push the inflation rate toward their target in 2016.
“The downward revision to the February inflation figures is unlikely to be enough to trigger further near term monetary easing,” said Martin van Vliet, senior economist at ING Bank.
“That being said, today’s figures are a clear reminder that low inflation may have become the new normal for the eurozone — which certainly won’t make it easy for some countries to reduce their debt overhangs,” he added.
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Among the 18 eurozone member states, negative annual rates were observed in Bulgaria, Cyprus, Greece, Croatia, Portugal and Slovakia.
The highest rates, meanwhile, were recorded in Malta and Finland, where year-on-year inflation stood at 1.6 per cent respectively in February.