Eurozone inflation decreases

Dropping farther from the European Central Bank's goal, the inflation in the 19-century eurozone has weakened in September. Statistics agency Eurostat informed on October 1 that inflation is down to 0.9 per cent in September which was 1.0 per cent in August. Low inflation can also be a sign of a weakened economy which has raised concerns for the officials at the Bank whose goal to maintain inflation just under 2 per cent. The Central Bank which is responsible to set monetary policy for European countries decided on September 12 to launch a package of measures focused on an increase of inflation and supporting the weakening growth. 

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Measures by ECB

The various measures include reducing a key interest rate benchmark to minus 0.5 per cent from minus 0.4 per cent. It also started to buy 20 billion euros a month in government as well as corporate bonds. This move will further increase the newly created money into the economy. Every step aims towards making credit cheaper for business and accelerate economic activity while increasing inflation. This package was reportedly opposed by the officials on the ECB's rate-setting board and was also criticized in the German media which is the largest member country of the Eurozone. The opponents believe that these measures have additional side effects which include weakened saving rates and should be kept aside for a genuine crisis situation. 

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Drop in inflation

Reportedly, the drop in inflation in September was mainly due to the volatile items like energy, and a smaller annual increase in the price of food, alcohol, and tobacco. On excluding these items, the annual inflation rose to 1.0 per cent from 0.9 per cent. The figure is important for monetary policy, which has been stalled near the same levels for months. On August 20, the Deutsche Bank predicted that the overall economic performance could decline slightly once again and it further said that they see Germany in a technical recession. 

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(With AP inputs)