World Economy

Eurozone Prices Falling for 1st Time Since 2009

Eurozone Prices Falling for 1st Time Since 2009Eurozone Prices Falling for 1st Time Since 2009

Plunging energy costs have caused consumer prices in the eurozone to fall annually for the first time since 2009, official figures showed Wednesday, in a development that’s likely to reinforce market expectations that the European Central Bank will soon provide an aggressive monetary stimulus.

In its flash estimate of inflation, Eurostat, the EU’s statistics agency, said consumer prices in the 18-country eurozone were 0.2 percent lower in December than the previous year. The decline was bigger than anticipated. The consensus in markets was for a 0.1 percent fall, AP reported.

The main reason behind the slide from the 0.3 percent inflation rate recorded in November was the plunging oil price, which has been most noticeably been passed on to consumers at the pump.

The fact that lower oil costs were the main factor behind the fall in prices is evident in the fact that the core rate, which excludes volatile items such as food, tobacco and energy, actually rose to 0.8 percent from 0.7 percent.

  Bond-Buying Program

Still, many in the markets think the ECB will back a government bond-buying program on the lines of those that have been pursued by other central banks over the past few years, such as the US Federal Reserve and the Bank of England.

That expectation has weighed heavily on the euro, which hit a new 9-year low of $1.1848 on Wednesday as traders price in the prospect of more euros in circulation. ECB President Mario Draghi has hinted lately that something could be announced soon to deal with the subdued price pressures in the eurozone. The ECB meets next on Jan. 22.

“These really are desperate times for the eurozone with the monetary bloc finally slipping into deflation,” said Dennis de Jong, managing director of “Draghi can’t afford to sit on his hands any longer and the introduction of a bond-buying quantitative easing program later this month now looks increasingly likely.”

  German Progress

The eurozone debt crisis has cost millions of Europeans their job, with one exception: Germany. The economic powerhouse has increased its workforce since 2007 and boosted its gross value added, a new study says, according to a DW report.

As Europe has languished amid a protracted financial crisis that has slashed millions of jobs across the Continent, Germany has managed to buck the trend and profited handsomely from globalization, a new study has revealed.

Since 2007, Germany has added nearly 2.3 million jobs to its workforce, a total of 6 percent, according to a study by the consultancy firm Ernst & Young. This came at a time when other countries using the euro cut 3.8 million jobs. The only other country able to create new jobs during the crisis was Malta.