Eurozone annual inflation is expected to be 0.7%
in January 2014, down from 0.8% in December 2013, according to a flash estimate
from Eurostat, the statistics office of the European Union.
Looking at the main components of Eurozone
inflation, food, alcohol & tobacco is expected to have the highest annual rate
in January (1.7%, compared with 1.8% in December), followed by services (1.1%,
compared with 1.0% in December), non-energy industrial goods (0.2%, compared
with 0.3% in December) and energy (-1.2%, compared with 0.0% in December).
Mario Draghi, ECB president,
has hinted that the central bank could consider buying packages of bank loans to
households and companies, if the deflation threat persists.
At the World Economic Forum in Davos, Switzerland, last Friday, Draghi said, "I
don't see deflation in the Eurozone…medium-term inflation expectation remain
firmly anchored at +2%."
Draghi said earlier this month that the central bank would be prepared to act to
counter an “unwarranted tightening of the short-term money markets.” In recent
months the central bank has been looking at measures that would increase lending
to the SME sectors in peripheral economies and also cut the premium on bank
rates compared with levels in core economies.
A proposal to buy loans for example would likely be controversial and would
likely be opposed by Bundesbank, the German central bank.
The Eurozone consists of Belgium, Germany,
Estonia, Ireland, Greece, Spain, France, Italy, Cyprus, Latvia, Luxembourg,
Malta, the Netherlands, Austria, Portugal, Slovenia, Slovakia and Finland.
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