Annual Inflation down to -0.2% in the Euro Area and EU

Eurostat have released depressing inflation figures for February, as the euro area and all of the EU have spiralled down into a deflationary minus 0.2%.

This is down from 0.3% that was recorded for January, although more positive than the minus 0.3% that was found for the corresponding month a year ago.

The largest upward influences on prices in the euro area annual came from restaurants and cafes  at 0.13%, rents 0.08% and fruit 0.06%.

While fuels for transport  on minus 0.49%, heating oil minus 0.24%, and gas minus 0.10%, had the biggest downward impacts.

Cyprus and Romania had the most negative rates of inflation, on minus 2.2% and 2.1% respectively, while the highest prices were found in  Belgium 1.1%, and Austria and Malta, both  on1.%.

In total, inflation fell in twenty of the member states, remained stable in one, and rose in six EU countries.

The euro area’s international trade surplus stood at EUR 6.2 billion for January, EUR 0.9 billion down compared to January 2015, with exports reaching EUR 145.3 billion, a month on month decrease of 2%.

While imports also fell by 1%, as buying goods from the rest of the world was EUR 139.1 billion. Year on year intra-euro area trade remained stable at EUR 132.5 billion.

Throughout 2015, the euro area exports of goods to the rest of the world increased  to EUR 2 043.0 billion, an increase of 5% compared with 2014.

Imports climbed  to EUR1 796.4 billion, an increase of 2%, in contrast to 2014. As a result the euro area reached a surplus of EUR 246.6 billion, a rise of EUR 64.2 billion from 2014. 

UK Pound Increases on the Greenback 

The UK pound has performed a sharp recovery against the US dollar, in the aftermath of the UK budget being announced, and the dovish statement released by the Federal Reserve’s Federal Open Market Committee (FOMC).

Currently, the pound is buying $1.43, having begun the day GMT buying $1.425, from the early hours of yesterday afternoon GMT, this represents a significant rise, as then the pound was commanding $1.405.

Markets reacted after the FOMC revealed yesterday that they will keep interest rates between 0.25% and 0.5%.

This contradicts their vision at the end of last year, after they raised interest rates, that they expected several gradual increments in interest rates this year.

The FOMC also pulled away from saying that they expected rate rises four times in 2016, and now believe only two rate rises will occur.

Also, they did not proclaim a huge amount of confidence in the US economy, expecting it to expand at only a moderate pace.

The pound appreciated on the greenback, despite the announcement yesterday from chancellor George Osborne that growth figures for the UK have been cut for the next five years.

For this year, originally the independent Office for Budget Responsibility said that growth would be 2.4%, which now has been revised down to 2%.

Also, borrowing forecasts for the UK have increased for the next three financial years, but a budget surplus has still been predicted for 2019/20.

Although the pound has fallen against the Euro, now buying EUR1.26, after beginning the early hours of the day buying EUR 1.274.

Moneycorps said in their daily report, that investors were not wholly impressed on most fronts over the budget speech, and sterling came out of Osborne’s address lower than it had gone in.

And alongside the euro, the pound had also fallen against the Yen, and the Australian and New Zealand dollars.