The Eurozone’s inflation rose 0.2% in February, according to a report published by Eurostat. The CPI (consumer price index) in January fell by 1.4%. The CPI fell by 0.2% year-over-year. The economy faced a serious deflationary situation over the past few years. The fall in energy prices and commodity prices are the major reasons behind the Eurozone’s (EZU) performance.
We also saw that Germany’s (EWG) CPI rose to 0.4% in February—compared to the fall of 0.8% in January. France’s (EWQ) CPI also rose to 0.3% in February—compared to the fall of 1% in January. The rise in the Eurozone’s CPI indicates that there’s a little improvement in citizen’s purchasing power.
ECB’s steps to boost inflation
On March 10, 2016, the ECB held its monetary policy review meeting. It took many steps to boost the inflation in the region. It allowed more asset buying—it increased it to 80 billion euros from 60 billion euros. This cut down the deposit rate into more negative territory -0.4% from -0.3%. It also cut down the refinancing rate by 5 basis points to 0%. Now, we have to see whether or not inflation is going up to the ECB’s 2% target level. Europe’s major indices fell the day after the ECB’s statement. The Eurozone’s major stocks such as SAP (SAP), Siemens (SIEGY), and Volkswagen (VLKAY) fell 0.35%, 0.28%, and 0.2%, respectively, that day. The market expects more downside risk for the economy.
In the next part of this series, we’ll analyze the performance of France’s CPI index.