Inflation in eurozone to slump in 2018

Source: Xinhua | 2017-09-19

INFLATION in the eurozone will slump in early 2018, the European Central Bank forecast yesterday, but return to an upward path toward its target later in the year.

Price growth could fall as low as 0.9 percent in the first quarter, the ECB said in its regular economic bulletin, far short of governors’ target of just below 2.0 percent.

Prices in the 19-nation single currency area rose rapidly in early 2017, driven by sharp changes in the cost of food and oil, it said.

That means inflation in early 2018 will be much lower, as forecasts suggest prices will have grown more slowly in a year-on-year comparison with the first quarter of this year.

The ECB analysts said that inflation should be back on course toward its target by the second half of 2018, barring unexpected price developments.

In quarterly forecasts released earlier in September, the ECB said it expected inflation to average 1.5 percent in 2017 and 1.2 percent in 2018 — a slight downgrade for next year compared with earlier predictions.