Euro zone inflation softens in June on energy dip

30 Jun 2015 | Author: | No comments yet »

Euro zone unemployment rate holds steady at 11.1% in May.

BRUSSELS – Official figures show that inflation across the 19-country eurozone eased in the year to June to 0.2 per cent from 0.3 per cent the month before.The annual inflation rate in the 19-nation region was 0.2 percent after 0.3 percent in May, the European Union’s statistics office in Luxembourg said on Tuesday.

Luxembourg (dpa) – Unemployment in the eurozone held steady at 11.1 per cent in May with 17.7 million people out of work in the crisis-plagued currency bloc, new data showed Tuesday. The jobless rate is at its lowest level in more than three years, but the eurozone has struggled to push it down significantly since a record 12 per cent was reached in 2013.

The data showed that among the member states, the lowest unemployment rates were recorded in Germany (4.7%) and the highest in Greece (25.6% in March 2015) and Spain (22.5%). Earlier this year, when prices were falling, there were fears the eurozone was set for a potentially debilitating period of deflation — falling prices can weigh on economic activity by making consumers postpone purchases.

The jobless ranks in the 19-country bloc did shrink by 35,000 people from April, but those numbers were not enough to push down the overall rate, according to the EU statistics agency, Eurostat. The positive price developments, which should ease concerns among European Central Bank policy makers, are being overshadowed by the escalation of Greece’s debt crisis.

The lowest overall unemployment rate was again found in Germany at 4.7 per cent while the highest continued to be recorded in Greece, the country hit hardest by the eurozone debt crisis. Talks with creditors on a new bailout have collapsed and the country is set to miss a payment to the International Monetary Fund on Tuesday. “Normalization of inflation is still far away, but at least the euro zone has started the journey,” Teunis Brosens, an economist at ING Bank NV in Amsterdam. “With deflation crossed off the list, the ECB can now fully focus on Greece.” While inflation is back above zero, that compares with the ECB’s aim to keep it just below 2 percent.

With the euro-area economy slowly improving and oil off its low, the central bank lifted its inflation forecast for 2015 last month to 0.3 percent from zero.

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