Eurozone inflation hits four-year low as coronavirus batters demand
The Eurozone inflation rate plunged to 0.3 per cent in April, official figures have shown, as coronavirus lockdowns caused energy prices to tumble and demand for goods and services to evaporate.
Annual Eurozone price inflation of 0.3 per cent was the lowest in four years. It was down from 0.7 per cent in March and 1.7 per cent in April of last year, the EU’s data body Eurostat said.
Eurostat said energy prices fell 9.7 per cent in the Eurozone in April. Excluding volatile energy prices, Eurozone inflation was 1.4 per cent last month.
Oil prices have plunged this year, as overproduction and geopolitical disagreements have formed a toxic combination with a huge drop in demand.
Food, alcohol and tobacco prices jumped 3.6 per cent, however, as shoppers stocked up and cooked and drank at home, rather than at restaurants and bars.
Portugal, Denmark, Sweden, Ireland, Spain and Greece all suffered deflation, with average prices falling by between 0.1 and 0.9 per cent.
In Germany, Europe’s economic powerhouse, inflation held up relatively well at 0.8 per cent.
The drop in Eurozone inflation will add to the pressure on the European Central Bank (ECB) to launch more monetary stimulus.
Its main interest rate is currently deeply in negative territory, however, so it is most likely to ramp up its quantitative easing bond-buying if it decides to act.
The Eurozone’s slump in inflation follows figures from the UK, which also showed price growth hitting a four-year low.
UK inflation fell to 0.8 per cent in April, dragged down by plunging oil prices and discounting from retailers.