In February, the eurozone consumer prices declined sharply by negative 0.2%and thus increasing the pressure on the European Central Bank.
This is a sharp reversal of the earlier 0.3% in consumer prices that was recorded in January.
According to Eurostat, this is the first inflation fall since September when it declined by 0.1%.
Energy was the major contributory factor to the decline as they went down 8% from the 5.4% slide in January.
Hopes that the ECB plans on how to boost the prices were effective in any way were dashed. Therefore, chances exist that the bank will announce stimulus measures in the month of March.
Earlier this month, ECB chief had insisted that the policies were producing results.
This is not the first time that the eurozone inflation has gone past 0%. Neither is it the first time that the decline in prices has been triggered by costs of energy.
Holger Sandte, economist, said that deflation would lead to an increase in the burden of high debt and thus would not be good at all for the euro area. Therefore, it is expected that ECB will not stop to ease monetary policy.
It does not matter what decision ECB will decide to do on 10th March. The next few months will see the inflation hover around 0before it can get back to its feet and pick up. That is if the oil prices will favor the situation.
On Saturday, the G20 finance ministers and central bankers came into agreement that they would utilize any policy tools, fiscal, monetary and structural methodologies so as renew the growth. They agreed to do so individually and also collectively.
Next week European Central Bank will review its policy. With the news about deflation in place, it is highly likely that the review will seek for actions that will take the inflation up (you read the word correctly) towards a certain target.