Eurozone Heading for Deflation?

Eurozone Heading for Deflation?

Figures released today by the European statistics office, Eurostat, show that inflation fell again in May to 0.5%. Concerns of possible deflation in the Eurozone have been circulating for several months, but this latest drop, down from 0.7% in April, will intensify calls for the European Central Bank to take steps to reverse the situation, especially as this drop in inflation has also affected Germany, which was showing better signs. The ECB meets on Thursday and with manufacturing output also down, it may mean a reduction in the base lending rate to zero. Read the full story.