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Eurozone inflation rate stuck below ECB target

September 18, 2017

Despite the European Central Bank's policy of infusing cash into the economies across the euro area, the bloc's inflation rate stays stubbornly lower than recommended by governors. They even predict a fresh slump.

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Consumer prices in the 19-member eurozone rose by 1.5 percent in August month on month, the European statistics office, Destatis, reported Monday.

The figure marked a slightly stronger pace than that recorded in July, with energy costs being the main driver behind the pickup.

However, the rate stayed well below the European Central Bank's own target of close to 2.0 percent despite the lender's continued lax monetary policy.

Some have forged ahead

Some eurozone members have already hit that target, including Belgium and Spain, while the Baltic countries have overshot it. Lithuania for instance logged an inflation rate of 4.6 percent in August.

The ECB itself said Monday that it was expecting a slump in consumer prices in the first quarter of 2018 when inflation could fall as low as 0.9 percent.

Observers are keenly awaiting bank governors' announcement that they will wind down their massive bond-buying program.

This policy known as quantitative easing is designed to pump cash into the economy and drive inflation toward the 2.0-percent target, believed to be most favorable for sustainable growth.

ECB President Mario Draghi has said policymakers will likely make a move in October.

hg/jd (AFP, Reuters)