Eurozone recovery still on the edge

Prices in the eurozone dropped 0.3% in February, according to a flash estimate from Eurostat.

In addition, there was a fall in the levels of unemployment in the 19-nation region, lowering Portugal’s rate to 13.3% in January compared to 15% in January 2014.

The level was against average jobless rate of 11.2% in the region.

But economists were left still fretting over a possible spiral of deflation which could harm the fragile recovery. If consumers wait until prices drop, the reduced demand impacts on companies and jobs.

Many believe that the European Central Bank has a tough job in preventing the economy from stalling, particularly in light of the drop in oil prices.

Energy prices alone were down 8%, slowing only slightly after a fall of 9.3% in January, Eurostat said.

Analysts are watching to see if the ECB’s €1.1 trillion stimulus programme, announced in January, will have an impact and cut deflation.

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