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Gloria Camila and her boyfriend, David, go shopping in the middle of a downpour on August 11, 2020, in Madrid, Spain.
Antonio GutiéRrez/Zuma Press
The eurozone had deflation in August, showing the failure of the European Central Bank to get inflation to its target as the region fights the coronavirus pandemic.
Eurostat reported prices fell 0.2% year-over-year in the eurozone in August, mostly on a sharp drop in energy prices. That is the first negative reading since May 2016, and the reading was lower than the 0.2% rise forecast by economists.
Outside of energy, prices rose a modest 0.7% year-over-year.
The ECB targets inflation of just under 2%.
Bert Colijn, senior economist for the eurozone at ING, said the notable element of the inflation data was the decline in services prices.
“The decline from 0.9 to 0.7% in August indicates that lower core inflation is not just noise but that the weak economy is starting to have more of an effect on price growth,” he said.
The data didn’t having much of an impact on financial markets, with the euro EURUSD, +0.31% trading at two-year highs vs. the dollar, and European stocks SXXP, +0.17% higher.
