Euro zone inflation eases

Date: Tuesday 16 Mar 2010

Consumer prices in the euro zone rose 0.3% from January, figures published by the European Union statistics office Eurostat showed on Tuesday.

Annual inflation was 0.9% in February, down from 1.0% in January. The lowest annual rates were observed in Latvia (-4.3%), Ireland (-2.4%) and Lithuania (-0.6%), and the highest in Hungary (5.6%), Romania (4.5%) and Poland (3.4%).

Compared with January 2010, annual inflation fell in fifteen Member States, remained stable in five and rose in five.

Howard Archer, chief UK economist at IHS Global Insight, expects consumer price inflation is likely to remain around 1.0% in the near term.

‘The easing back in already low Euro zone consumer price inflation in February reinforces our belief that the ECB will hold off from raising interest rates from the current level of 1.0% until 2011, given likely uneven and gradual overall Euro zone growth for some time to come,’ Archer added.

‘Furthermore, the ECB will probably continue to tread lightly in withdrawing its emergency liquidity measures.’

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