BRUSSELS: Inflation in the 19-nation eurozone was unchanged in July while the jobless rate for June was also flat, suggesting the economy maintained only modest growth, official data showed on Friday.

Analysts said the figures were disappointing, with no sign as yet that the European Central Bank’s unprecedented economic stimulus programme is beginning to have a real impact on the economy after years of tepid gains.

Consumer prices rose 0.2 per cent in July, the Eurostat statistics agency said, the same rate as the previous month and in line with analysts’ forecasts.

The ECB has an inflation target of just under 2pc and in March launched what is known as a Quantitative Easing (QE) programme to pump about one trillion euros through to September 2016 into the economy in an effort to get it back on track.

Underlying inflation, which strips out volatile energy and food prices, was slightly more positive from the ECB’s point of view, rising to 1pc in July from 0.8pc in June, Eurostat said.

Unemployment meanwhile was unchanged at 11.1pc in June, it said.

A pick-up in consumer prices is usually evidence of increased demand which in turn should produce more jobs so the figures suggest the economy is bumping along despite the negative impact on sentiment of the long-running Greek debt crisis.

Prices were actually falling in the first three months of the year — with January down a worrying 0.6pc, stoking fears of deflation.

DEFLATION CONCERNS: Deflation can be a killer for an economy because consumers may put off purchases expecting to buy goods cheaper at a later date but that undermines demand, and then jobs, setting off a vicious cycle.

“On the face of it, a disappointing set of data for the eurozone,” said Howard Archer of IHS Global Insight.

Archer said weak energy prices will continue to put pressure on the data but the ECB “will take a fair degree of comfort” from the core inflation figures.

“If inflation dips lower or even fails to pick up in the near term, the ECB could seriously consider taking further stimulative action such as front-loading its QE,” he added.

Eurostat said there were some 17.76 million unemployed in the eurozone in June, up 31,000 from May even as the headline rate remained unchanged.

The June 2014 unemployment rate was 11.6 per cent, with some 811,000 jobs gained over the year since then, it said.

James Howat at Capital Economics said the jobs report was cause for the concern and the ECB may eventually have to do even more.

“Worryingly, surveys of employment intentions have weakened recently, suggesting that the labour market recovery will remain pretty weak,” Howat said in a note.

Published in Dawn, August 1st, 2015

On a mobile phone? Get the Dawn Mobile App: Apple Store | Google Play