Euro inflation lowers
A forward-looking indicator showed today that Eurozone inflationary pressures fell to new record lows in May. The new low suggests that the official measure of inflation will likely fall further below zero in the coming months.
The Economic Cycle Institute's Eurozone Inflation Gauge hit a low of 81.7, and has been driven lower by falling inflationary pressures in Germany and Spain. Since the gauge has dropped to new lows, consumer prices in the euro zone are likely to fall further.
Euro zone inflation fell 0.1% in June and is the first time prices have touched negative territory. It is expected that the rate will fall even further in the later stages of the year even though interest rates are at a record low of 1%.
The inflation news has the euro exchange rate at GBP0.8602 and USD1.4076
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