Eurozone in Deflation — Again

Eurozone in Deflation — Again

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The Eurozone fell into deflation again today, according to early data from Eurostat, the official statistical agency of the European Union.

All consumer prices in the eurozone fell 0.2% on an annual basis. Last month, the reading was positive, if very near to zero, at 0.3%.

The key downward driver of all prices was falling energy prices, which dropped by 8% on an annual basis in February. Energy prices had just fallen 5.4% in January.

Energy accounts for approximately 10% of all prices in the eurozone.

Core inflation has fallen below January’s 1% number to 0.8%.

A look at a chart of historical price data inside the eurozone shows that euro area dipped into deflation after 2008 crisis, recovered in 2010, and then began to fall again in 2012. A look at the source data show five months with negative prints for all prices in 2015.


Chart source: European Central Bank

February’s early negative print is the first time all prices within the eurozone have gone negative since September of 2015.