BRUSSELS (AP) - Consumer prices across the 19-country eurozone were up 0.3 percent in May from the year before, in the first positive inflation reading in six months, official figures showed Tuesday.
BRUSSELS (AP) — Consumer prices across the 19-country eurozone were up 0.3 percent in May from the year before, in the first positive inflation reading in six months, official figures showed Tuesday.
The figure reported by the EU's statistics agency, Eurostat, was up from a flat reading in April and slightly above market expectations for a 0.2 percent rise in May. It also suggests the eurozone is past its bout of falling prices, which can become a long-term threat to growth.
Consumer prices started falling in December, partly because of a sharp drop in global oil prices. The anemic state of the eurozone economy as well as high unemployment also kept a lid on inflation by subduing wage pressures.
However, over the past couple of months, oil prices have started edging higher while underlying inflation pressures across the eurozone appear to be intensifying as the eurozone economy shows signs of improvement. The core inflation rate, which strips out volatile items such as food, energy, tobacco and alcohol, was up 0.9 percent in the year to May, above April's 0.6 percent rate.
Policymakers at the European Central Bank will welcome Tuesday's inflation news as they gather in Frankfurt, Germany, for their latest policy meeting. However, they're unlikely to get too carried away as inflation is still way short of the target of just below 2 percent.
Earlier this year, the ECB announced a 1.1 trillion-euro ($1.2 trillion) monetary stimulus in the hope that the newly created money in the economy could stoke inflationary pressures. A by-product of the policy was to push the euro down, which raises the price of imports and helps shore up inflation.
The ECB's concern centered on the possibility that prices might fall consistently over time. Such a longer-term fall in prices, called deflation, encourages people to put off spending and can prove difficult to reverse because it requires altering people's expectations. It can lead to years of economic stagnation, as in Japan over the past two decades, or at worst, into something more pernicious, such as the Great Depression of the 1930s.