Euro zone inflation turned negative again in September as oil prices tumbled. As David Pollard reports, it will raise the pressure on the European Central Bank to beef up its asset purchases to kick start anaemic price growth.
Consumers have been making the most of lower fuel prices over recent months. They're one factor behind a euro zone dip into deflation in September. Could the ECB now be primed to reach for the pumps itself - to inject a bit more QE into the economy? Rabobank's Jane Foley wouldn't rule it out. (SOUNDBITE) (English) SENIOR FX STRATEGIST, RABOBANK, JANE FOLEY, SAYING: "If we were to go back to do a deflationary scenario in Europe, it would be perhaps very difficult to assume that it would be easy to shake off, so it is a significant risk and something that the ECB of course has been taking very seriously." The ECB's been buying 60 billion euros of assets each month to boost inflation upwards. Prices, though are still going down. September's year-on-year inflation gives a minus reading. Core inflation is more respectable - but still way off the bank's target rate of close to 2 per cent. More QE a possible then - if it works. (SOUNDBITE) (English) SENIOR FX STRATEGIST, RABOBANK, JANE FOLEY, SAYING: ''We are already seeing quite a lot QE ... and the big question is, is this environment that we now find ourselves in conducive to QE being particularly helpful in stirring demand?'' On the jobs front, Italy's unemployment rate fell marginally in August. German unemployment inched up - though, is still at record lows, and retail sales fell unexpectedly in August, though after a sharp rise the month before. Perhaps more worrying for Mario Draghi - the Bank of Spain expects Q3 growth to slow. And Greek retail sales fell 7.3 per cent year on year in July. A reminder were it needed of another ECB problem that is showing no signs of going away yet.