Prices have fallen across the eurozone for a fourth month, as economists warn that the currency union could fall into a deflationary spiral. Official statistics showed that prices fell by 0.1pc in the year to March, a slower pace than the 0.3pc Eurostat reported for the previous month.
No economist polled by Bloomberg expected inflation any higher than zero in the year to March. The most pessimistic analysts predicted that prices would fall by 0.5pc in the period. Jonathan Loynes, of Capital Economics, said: "The latest data ... do little to diminish the danger of a prolonged period of deflation in the currency union."
"The increase was driven entirely by higher food and energy inflation, no doubt partly reflecting the drop in the euro during the month," he said. The euro area first entered deflation in December, forcing the European Central Bank (ECB) to deploy a €1.1 trillion (£800bn) bond-buying scheme in a bid to revive the economic area. Purchases began in March at a monthly rate of €60bn as inflation has remained well below the ECB's target of close to 2pc. Sandte, of Nordea, said: "For the next few months, we expect the headline [inflation] rate to hover around zero." "Depending on the monthly changes in energy prices, the headline rate can easily fall back a bit deeper into negative territory," he added. The inflation data came as Eurostat announced that the euro area unemployment rate fell by 0.1 percentage points to 11.3pc in February.
Compared with a year ago the jobless rate fell in 22 of the European Union's member states, and increased in six.
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