Deflation has been keeping economists in Europe awake at night. European Central Bank officials say that they should rest easy, though, asserting that deflation in the eurozone isn’t happening. Data that came out on Thursday showed that consumer prices have been rising at a distinctly slower rate in December.
Eurostat, the European Union’s statistics arm, said that consumer prices went up 0.3 percent from November to December, and that compared to December 2012 they had gone up 0.8 percent, reports The Wall Street Journal.
The annual inflation rate fell from 0.9 percent in November, putting it that much further from the European Central Bank’s goal of just beneath 2 percent. The “core” rate of inflation was reported by Eurostat, removing more unpredictable stats such as food and energy inflation, and it decreased to 0.7 percent, the lowest reading since 2001.
While the ECB is attempting to comfort those with concerns, Christine Lagarde, head of the International Monetary Fund, said that there are “rising risks of deflation, which could prove disastrous for the recovery,” per The Wall Street Journal. ”Deflation is the ogre that must be fought decisively.”
In December, the president of the European Central Bank, Mario Draghi, made it clear that if inflation remained too low or looked to be decreasing dangerously, the bank would stand prepared to intervene. On January 9, the bank decided to let things run their course for a while longer, leaving policy as it was. Draghi did reiterate his promise that the ECB would make extreme changes to policy if need be, according to The Wall Street Journal.
“We have always done that over the past few years. We’ve been very audacious and if it is needed we would take extra measures. There is no doubt about that,” said Christian Noyer, the governor of the Bank of France, referring to ECB action, the Journal reports.