The Strategist

This May, the Inflation Rates Of Eurozone Rise To ‘0.3%’

06/08/2015 - 07:59

The rising inflation rates to 0.3% in the month of May introduce fresh breath of hope in the European economy. – 07 May 2015 – The B.B.C. News reports that the month of May has brought positive news in Europe. The economy of the said country has been facing an affect of inflation for the past five months. Consequently, the rising “eurozone” caused either stagnation or sheer “falls”. However, lifting the veils of economic-inflation Europe sees a hope of “economic recovery.  
As per the information provided by Eurostat, a statistics agency of Europe, the rate of inflation on an annual basis increased to a sudden “0.3%” which had remained a total nil figure in the previous month of April. In fact, B.B.C News states further that the E.C.B or namely the “European Central Bank” is “likely” to enjoy a welcoming scenario in the market followed by the “return of inflation” for the said bank has attempted to evade “deflation” in the recent preceding months.
Moreover, in the present turn of events, the food prices along with the prices of drinks saw a rise of one point two percent whereas the same for services increased by one point three percent in cost. Although, the prices of energy market came down at a much “slower pace”, the said market still remains five percent down in the month of May, failing to compare its last month’s fall of five point eight percent in the annual turnover.
Nevertheless, the more “volatile” market sectors, like tobacco, food and energy markets, which in B.B.C’s language gets ‘stripped out’ due to the “core inflation rate”, regained a higher inflation mark of point nine percent in the present month as compared to its previous month’s performance of point six percent.
The present market situation owing to the hopeful turn of “eurozone”, more and more negates the risk of deflation as it becomes ‘increasingly’ an unlike possibility. Two months ago, that is to say sometimes in last March, the “European Central Bank” initiated a “bond buying programme” of a total amount of “a massive €1.1 trillion”. The said venture was an attempt to kick-start the process of stimulating the economy of euro-zone.
Furthermore, in B.B.C. News’ words:
“The latest inflation figure will raise hopes that the programme is working.”
The imminent risk of deflation hovering over European currency for last few months resulted in an alarming note for the policymakers, who were condemned to spend the said period in fearing the worse. They were concerned lest the falling price “become entrenched” which will lead the businesses and other consumers to introduce a delay in their purchase in the hope of further price fall.
However, E.C.B’s target level of “consumer inflation” didn’t see it nearing two percent, although it remained below that mark, from the beginning of 2013, whereby it fell further, from the last position of three percent that was recorded in the year of 2011. Nevertheless, in the words of the IHS Global Insight’s chief-European economist, Howard Archer’s:
"This increase was stronger than widely expected, even if inflation is hardly racing ahead... Renewed dips into deflation for the eurozone are looking increasingly unlikely with the risks diluted by a firming in oil prices from their January lows, the weakness of the euro and improved eurozone economic activity."