EU inflation falls to -0.3pc in September

BRUSSELS: Eurozone inflation fell deeper into negative territory in September, official data said Friday, amid plummeting demand due to the coronavirus crisis.

The EU's Eurostat data agency said inflation fell to - 0.3 percent last month, a drop from - 0.2 percent in August and way off the official target of just under two percent.

The descent into deflationary territory will put pressure on the European Central Bank to draw up further stimulus measures, already at 1.35 trillion euros ($ 1.58 trillion), and should encourage governments to spend more.

Policymakers worry about falling prices as they can encourage consumers to hold off making purchases in hopes they fall further, which can lead to a spiral of dropping economic activity, employment and prices.

Over the longer term, the ECB sees inflation averaging just 1.3 percent in 2022, still far below its target, which has triggered calls for reform.

ECB chief Christine Lagarde said Wednesday that the eurozone should have an inflation goal "that the public can easily understand" and is calculated in a way that better reflects people's everyday lives.

Inflation in the 19- nation eurozone has stayed stubbornly low for years despite unprecedented economic stimulus from the ECB, keeping the target well out of reach and fuelling calls for a rethink.

Pursuing a less strict inflation target would follow in the footsteps of the US Federal Reserve which last month pledged more leeway, allowing inflation to rise above 2.0 percent.