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Eurozone inflation slides into ‘danger zone’: ECB

Eurozone inflation slides into ‘danger zone’: ECB

PanARMENIAN.Net - Eurozone inflation has fallen to its lowest level since the height of the financial crisis, sliding further into what the European Central Bank (ECB) has described as a "danger zone", BBC News reports.

Prices rose in the single currency area by 0.4% in July, from 0.5% in June.

The ECB considers that an inflation rate of below 1% poses a risk of deflation.

Separate figures show that unemployment in the region fell slightly to 11.5% in June compared to 11.6% in May.

The new inflation figures from the European Union's statistical office, Eurostat, show that the rate remains persistently below the ECB's target rate of 2%. Prices have risen at an annualized rate of less than 1% for the last ten months.

Central Bank governor, Mario Draghi, has previously warned that he would deem inflation below 1% to be in a "danger zone", which could lead to prices tipping into a deflationary spiral.

In June the ECB introduced a package of measures to boost growth and tackle the threat of inflation. It cut interest rates, including reducing the bank deposit rate to below zero, and made available cheap long term loans to banks. It promised to stand ready to take more action if inflation continued to fall.

The eurozone jobs data provided a gentle pointer in the opposite direction, however, towards stronger growth.

The number of registered unemployed in the eurozone stood at 18.41 million in June, down 152,000 from May. The unemployment rate in the 18-nation single currency region June dipped to 11.5% compared to 12% a year ago. In the wider 28-member European Union the jobless rate also edged lower from 10.3% in May to 10.2% in June.

Austria's unemployment rate is the lowest in the region at 5%, followed by Germany at 5.1%.

However, Greece, with an unemployment rate of 27.3% and Spain, at 24.5%, are still grappling with severe levels of joblessness.

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