Consumer prices in the euro area fell

  • prices
  • cash
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  • energy
  • Consumer prices in the euro area fell more than expected in December because silnotto lower energy prices show first Eurostat. Thus region officially falls into deflation, which is expected to lead to a decision of the European Central Bank (ECB) to launch a program to buy government securities.

    Statistics show that in the last month of last year inflation in the 18 countries using the euro was at a level of -0.2% yoy against 0.3% the previous month. The last time inflation in the monetary union is returned to negative territory in October 2009 when it was -0.1%.

    Expected result

    Falling into deflation was expected, but the average estimates of analysts was for a drop to -0.1%. Core inflation, which does not include volatile energy prices and unprocessed food remained unchanged from October and November level of 0.7%. Part of prices increased in December, the most significant is the growth in services - by 1.2%. The index for energy prices, however, fell by 6.3% yoy, while food - by 1%, making a negative outcome.

    Now, more than any time in modern history, individual investors are truly saving more and keeping most of their investment cash out of the stock market. It is estimated that over 13 trillion in cash from individual investors is out of the market, primarily because of fear. Furthermore, there is evidence of companies all over the world holding enormous amounts of cash on their balance sheets for similar reasons of fear and future uncertainty - several trillion to be exact. Some have even estimated the amount of cash sitting on the sidelines is greater than the world stock markets' entire market capitalization value. This conjecture could certainly be made for the US stock market.

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