Consumer prices in the eurozone fell more sharply and more broadly in January, heightening the risk of a slide toward deflation that the European Central Bank hopes to halt and then reverse through its new bond-buying program.
The European Union’s statistics agency said on Friday that consumer prices were 0.6% lower than in January 2014, having fallen 0.2% on an annual basis in December. The decline in prices was the largest since July 2009.
The plunge in consumer prices is unlikely to have an immediate effect on the ECB policies. Last week, the ECB said it would purchase €60 billion ($68 billion) in public and private debt securities each month, mostly government bonds, starting in March and lasting until September 2016 in a bid to bring inflation closer to the bank’s 2% target.
Still, the longer consumer prices persist in negative territory, the more pressure the ECB will eventually come under to extend the purchase program. Officials have said it won’t end until they are confident that inflation is on track to reach their objective.