ECB: Price Pressures To Remain Subdued
09.04.09, 12:21 Uhr
FRANKFURT -(Dow Jones)- Price pressures in the euro zone are likely to remain subdued due to a substantial fall in commodity prices, the European Central Bank said in its monthly bulletin Thursday. (Foto: Anders)
The 16 countries using the euro are undergoing a severe economic downturn as is the world economy, the ECB said.
The risks to this outlook are broadly balanced the ECB said.
"There may be stronger than anticipated positive effects due to the decrease in commodity prices and to policy measures taken," the ECB said in the editorial part of the bulletin.
"There are concerns that the turmoil in financial markets could have a stronger impact on the real economy, as well as that protectionist pressures could intensify and that there could be adverse developments in the world economy stemming from a disorderly correction of global imbalances," it added.
However, markets' inflation expectations in the medium and longer term remain firmly anchored, at levels consistent with price stability, the ECB said.
The ECB's key concern is maintaining price stability, which it defines as an average annual inflation rate of just below 2% over the medium term - or 18 to 24 months.
Earlier Thursday, data from Germany, the euro zone's largest economy, showed that lower fuel and heating oil prices weighed on the country's consumer price index.
German CPI fell 0.1% on the month in March, with prices rising 0.5% on the year, final data released by the federal statistics office showed, confirming a previously released estimate.
It was the lowest print in nearly 10 years, the office said.
Germany's European Union-harmonized index for consumer prices, which the ECB uses, was down 0.2% on the month and 0.4% higher than in the corresponding month last year.
European statistics agency Eurostat is scheduled to release the bloc's aggregate inflation reading Apr. 16.
A preliminary flash estimate suggests that annual inflation dropped to 0.6% in March from 1.2% in February, the lowest level since comparable records began in 1996.
The risks to this outlook are broadly balanced the ECB said.
"There may be stronger than anticipated positive effects due to the decrease in commodity prices and to policy measures taken," the ECB said in the editorial part of the bulletin.
"There are concerns that the turmoil in financial markets could have a stronger impact on the real economy, as well as that protectionist pressures could intensify and that there could be adverse developments in the world economy stemming from a disorderly correction of global imbalances," it added.
However, markets' inflation expectations in the medium and longer term remain firmly anchored, at levels consistent with price stability, the ECB said.
The ECB's key concern is maintaining price stability, which it defines as an average annual inflation rate of just below 2% over the medium term - or 18 to 24 months.
Earlier Thursday, data from Germany, the euro zone's largest economy, showed that lower fuel and heating oil prices weighed on the country's consumer price index.
German CPI fell 0.1% on the month in March, with prices rising 0.5% on the year, final data released by the federal statistics office showed, confirming a previously released estimate.
It was the lowest print in nearly 10 years, the office said.
Germany's European Union-harmonized index for consumer prices, which the ECB uses, was down 0.2% on the month and 0.4% higher than in the corresponding month last year.
European statistics agency Eurostat is scheduled to release the bloc's aggregate inflation reading Apr. 16.
A preliminary flash estimate suggests that annual inflation dropped to 0.6% in March from 1.2% in February, the lowest level since comparable records began in 1996.
ECB Web site: www.ecb.int
