Europe’s inflation has fallen to a new record low since the beginning of the financial crisis. The European Central Bank has said this is now becoming very dangerous for the economies of Europe.
Inflation rose only by 0.4% in July, down from 0.5% in June. At this low rate there is a very real risk of deflation. The European Central Banks target is 2%. If it stays lower than 1% there is a chance prices could begin to spiral.
A few EU countries have also felt a deflation and Spain`s latest figures have shown a fall in prices over the last 12 months. Other countries such as Greece and Portugal have had inflation well below Zero.
It is widely expected that the European Commission Bank will begin on a programme of quantative easing, with them buying financial assets from governments such as debt and bonds, with the aim to help increase inflation.
These figures show how weak the Eurozone economy is and the UK is very lucky to not be part of the since currency at present, as the UK continues to grow and thrive.
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