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Eurozone Moves into Deflation for First Time

From The Financial Times:

Eurozone inflation turns negative

By Ralph Atkins in Frankfurt
Financial Times
Published: June 30 2009 11:03 | Last updated: June 30 2009 18:16

Eurozone annual inflation has turned negative for the first time since records began, creating a headache for the European Central Bank as it seeks to draw a line under emergency measures to tackle continental Europe’s recession.

Consumer prices in the 16-country eurozone were 0.1 per cent lower in June than the same month a year before, according to Eurostat, the European Union’s statistical office. It was the first time eurozone annual inflation had fallen below zero since comparable records began in 1991.

The fall in prices reflects sharply lower energy costs and the effects of the region’s worst economic downturn since the second world war. Annual inflation is hugely undershooting the ECB’s target of “below but close” to 2 per cent.

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