Euro zone consumer prices fall in September

Eurostat today announced that consumer prices fell in the euro zone in September by a faster rate than they had in the previous month.

Furthermore, prices fell further than had been expected by economists after Eurostat said the inflation rate fell to -0.3% in the 12 months to September, from -0.2% in the year to August.

On a monthly basis, prices in the 16 nations that use the euro slid 0.2% percent in August, 0.7% in July and 0.1% in June.

September represents the fourth consecutive month that the rate of inflation has been negative in the euro zone but the European Central Bank (ECB) does not expect deflation.

A short period of deflation (where prices fall rather than increase) could be a serious threat to the economy because it deters consumers and businesses from spending in expectation of falling prices.

Inflation is expected to stay negative next month due to falling oil prices. However, according to Martin van Vliet, an economist at ING, headline inflation is likely to turn positive in November and creep up going into 2010.

In other news, unemployment figures for the euro zone are due to be published on Thursday.

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