September 18, 2019 / 9:06 AM / 3 months ago

Euro zone inflation confirmed at low of 1% in August

FILE PHOTO: A shopper pays with a Euro bank note in a market in Nice, France, April 3, 2019. REUTERS/Eric Gaillard/File Photo

BRUSSELS (Reuters) - Euro zone inflation was stable in August at its lowest level in nearly three years, the European Union’s statistics agency said on Wednesday, confirming its earlier estimates.

Eurostat said inflation in the 19 countries sharing the euro was at 1% on the year in August, unchanged from the July reading and in line with expectations in a Reuters poll.

On the month, inflation went up 0.1%, below market expectations of a 0.2% rise, new monthly data released by Eurostat showed.

The rates of yearly price increases in July and August are the lowest since November 2016, well below the ECB’s inflation target of below but close to 2% despite years of unprecedented monetary stimulus through rate cuts and trillions of euros of bond purchases.

Core inflation, which strips out volatile unprocessed food and energy and which the ECB scrutinises in policy decisions, was also confirmed at 1.1% in August on the year, the same rate recorded in July.

The narrower measure also excluding alcohol and tobacco prices, at which many market economists look, was unchanged at 0.9%.

Last week, European Central Bank chief Mario Draghi pledged indefinite monetary stimulus to revive an ailing euro zone economy and push up inflation.

Core inflation was unusually higher than the headline figure in August because energy prices dropped by 0.6% from a year earlier, in a new sign of a global economic slowdown.

Prices in the services sector, the largest in the euro zone, went up by 1.3% on the year, accelerating from July when they rose 1.2%.

Reporting by Francesco Guarascio @fraguarascio; editing by Philip Blenkinsop

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