Eurozone inflation

Inflation dropped to 0.4 per cent from June's 0.5 per cent, hitting its lowest level since late 2009 in the aftermath of the global financial crisis. In July 2013, inflation ran at 1.6 per cent, well short of the ECB target of around 2.0 per cent. The July inflation report ‘underlines the weakness of price pressures (in the eurozone) and support our view that the ECB has more work to do to tackle the risk of deflation,’ said Jonathan Loynes at Capital Economics. Howard Archer of IHS Global Insight said the inflation figures were a ‘blow’ for the ECB. ‘There is undeniably a very real risk (inflation) ... could go lower still and it certainly looks unlikely to move markedly higher any time soon,’ Archer said. This will be doubly the case given the ‘relatively limited economic activity’ expected in coming months, while new economic sanctions just adopted against Russia over the Ukraine crisis pose another ‘downside risk,’ he added, according to AFP.