The euro zone is not deflating, it’s just at risk of a too-prolonged period of low inflation, says European Central Bank President Mario Draghi.
Judging by recent evidence, it might be very prolonged, which is bad news for an economy struggling to shift out of low gear.
Inflation held steady at just 0.5 percent in June, well below the ECB’s 2.0 percent ceiling, stuck in what it calls the “danger zone” of below 1.0 percent for nine straight months.
And the latest from the euro zone’s private sector also shows companies are nowhere close to regaining any pricing power.
Several prominent forecasters now say inflation will fall even lower than where it is now.