BERLIN: Peter Praet, chief economist of the ECB, said last week that the central bank is prepared to be “creative” to defeat adverse economic shocks such as deflation in the eurozone.
Well, that’s lucky as the problem of falling prices in the eurozone doesn’t look as though it is going away any time fast. Import prices in Germany, Europe’s biggest economy, fell by a greater than expected 6.6 per cent in April compared with a year earlier, marking the 40th consecutive month of price falls.
The 6.6 per cent year-on-year price fall in April was the biggest so far in 2016 and was greater than the 6.2 per cent decline anticipated by economists. Month-on-month, the picture was also worse than expected as prices slid by 0.1 per cent versus a 0.7 per cent rise in March and expectations of a 0.4 per cent gain.
Destatis, the German statistics office, said that even if falling commodities prices are excluded from the calculation, prices fell 4 per cent year-on-year. Prices of exports are also dropping, falling by 2 per cent in April versus a year earlier.
The eurozone’s annual inflation rate remains stuck in negative territory coming in at -0.2 per cent in April.
Mr Praet told a Portuguese newspaper last week:
