Euro Zone Price Pressures Persist

Price pressures stayed high in the euro zone in April in the face of a likely recession, the European Union’s statistics office, Eurostat, said on Monday.

Eurostat said that this had kept the interest rate cuts off the agenda for a European Central Bank (ECB) as it was seeking ways of reviving economic growth within its inflation mandate.

It said that the annual consumer price inflation in the 17 nations sharing the euro moderated to 2.6 per cent from 2.7 per cent in March.

“As the euro zone heads into its second recession in just three years, some of its leaders are rallying to a call by ECB President, Mario Draghi, to re-ignite the bloc’s economy with policies that focus on growth,” it said.

Eurostat said that the policies should not just be debt and deficit reduction.

“But, the ECB’s strong focus on containing inflation with below two per cent at a time of high world oil prices means politicians cannot expect action to lower the cost of borrowing any time soon.

“While inflation was below last year’s peak of three per cent, economists and the ECB had expected prices to fall steadily as the economy stumbles.

“They also expected the prices to offer some relief to households at a time of rising unemployment and sharp spending cuts,’’ it said.

Eurostat said that the rate of consumer price inflation rose in March from February and now back to February’s level.

It said that inflation was driven up by persistent worries of a crude oil supply disruption in the Middle East.