The European Central Bank (ECB) has welcomed the news that inflation in Europe has dropped to its lowest level since Russia invaded Ukraine in 2014. According to the latest figures, consumer prices across the Eurozone have risen by just 0.2% over the last year, down from 1.1% a year ago and well below the ECB’s target of close to but below 2%.
This low rate of inflation is good news for consumers as it means their wages will go further than they would otherwise do if prices were rising faster than incomes. It also provides some relief for businesses that are struggling with weak demand due to economic uncertainty caused by Brexit and other geopolitical issues, such as US-China trade tensions.
The fall in inflation should also give policymakers at the ECB more room to bring interest rate hikes back under control after years of successive increases which had made borrowing more expensive for households and businesses alike. This could help stimulate growth by encouraging investment into productive activities, such as research & development or capital expenditure on new equipment, which could then lead to job creation and higher wages over time – all positive developments that can benefit everyone living within Europe’s borders going forward.
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