Inflation in the Eurozone has hit a five-year low which led to five countries in the Eurozone experiencing a deflation. There is now little hope that the European Union can avoid the third recession in just six years. According to figures from Eurostat consumer inflation remained unchanged at 0.3%. However the countries Spain, Slovenia, Greece, Italy and Slovakia showed a deflation, and Portugal and Cyprus showed no inflation or deflation. The central bank in Europe is now urged to consider US-style bond buying or quantitative easing.
According to Capital Economics senior European economist, Jennifer McKeown, it is probable that a quantitative easing programme will be announced in the coming months, and since the inflation index is so close to 0, there is no real cushion against the deflation, meaning Europe is at high risk of entering another recession.
Unemployment is still at a record high in many countries, and businesses in Europe are reluctant to supporting the recovery that started in early 2013. The economy is looking more and more fragile.
Inflation has been too low for the last 12 months, and resides in the danger zone of the ECB, which is less than 1%. The inflation also reflects the decrease in global oil prices, as they have decreased more than a quarter in the last four months. The energy inflation in the Eurozone dropped by 2.3%. The core inflation is currently at 0.8% and dropped 0.1% since August.
Inflation in Malta has been stable since last year and the Harmonised Index of Consumer Prices was at 0.6% last month. This is the same figure that was registered the year before as well. When the global economic crisis hit Europe and the rest of the world very hard, Malta suffered very little from the impact of the crisis. This is mainly because of the economic structure of the banks in the country, and measures the government applied to be competitive with other countries. Overall, the inflation in Malta has been stable, and there are still great business opportunities in Malta.
