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Europe has escaped its deflation nightmare - just

Apr 14, 2016, 14:35 IST

Eurozone inflation escaped from negative territory in March, with prices neither growing nor falling over the the course of the month, according to the latest release from Eurostat. Inflation was flat at 0.0%.

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That number means that prices are no longer falling, but aren't growing either, and are a very long way from the European Central Bank's 2% target.

On a month-to-month basis, prices were up by 1.2% in the Euro area, while year-on-year core consumer prices grew by 1%.

Core prices are an important measure because they strip out the most volatile items - things like fuel and food prices which are subject to massive variations.

The eurozone has been flirting with price deflation for the past year or so, largely hovering just above zero since early 2015. Here's how inflation in the eurozone looks over the last few years:

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Eurostat

A large part of the eurozone's extremely low inflation right now is down to the slump in the price of oil over the last year - but the core figure shows that other prices aren't rising by as much as the ECB would like, either.

Thursday's CPI figures are the second set to be released European Central Bank and its president Mario Draghi announced a series of new monetary policy measures, including cutting all its base rates, and extending its programme of bond buying.

The measures are designed to try and boost stalling inflation, as well as growth, within the Eurozone. So far the ECB's negative interest rate policy (NIRP) hasn't managed to stimulate inflation, but today's figure may give a glimmer of hope to the bank, that measures are just about starting to work.

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