- Mario Draghi, ECB Governor
The Euro zone slipped into deflation, as consumer prices fell more than expected due to plummeting oil prices, according to the flash estimate by Eurostat. The data showed consumer prices fell on an annual basis in December for the first time since the financial crisis more than five years ago, building pressure on the European Central Bank to employ stimulus programme as early as this month. Preliminary CPI dropped 0.2% in December, compared with the 0.3% rise recorded in the preceding month. December was the 22nd straight month, in which the inflation rate remained below the ECB's goal of just under 2.0%. Inflation has been cooling since August 2012, declining below 1.0% in October 2013, and below 0.5% in July 2014. Meanwhile, core CPI, which strips out volatile energy, food, alcohol and tobacco, climbed 0.8% in the reported month. The data indicates prices are not responding to the recent stimulus measures by the ECB, which increases pressure on central bankers to step up more aggressive stimulus.
A separate report showed the unemployment rate in the currency bloc remained unchanged at 11.5% in November, but stayed below the 12% threshold for ten consecutive months. In the meantime, in Germany, the European powerhouse, employment rose by 27,000 people, while jobless rate fell to 6.5%. However, in Italy the unemployment rate hit a new all-time high of 13.4% in the reported month, according to ISTAT.
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