The euro zone rate of inflation has entered negative territory due to falling oil prices. That was an impulse for the ECB to act, as what is good for consumers is bad for the economy.
On Friday, the EU statistics office, Eurostat, reported that in January consumer prices in the 19 countries using the euro had fallen 0.6 percent on a year-to-year basis, down from minus 0.2 percent in December.
The negative rate of annual inflation was primarily driven by falling energy prices, which had slumped 8.9 percent - an acceleration from 6.3 percent in December, according to Eurostat's flash estimate for the month.
Prices for food, alcohol and tobacco, as well as non-energy industrial goods - both down by 0.1 percent - also increased the pace of the slide. Only the services sector still saw prices rising, with the growth there, however, slowing too.
The declines are set to further fan fears of a deflationary spiral which could send prices on a downward slope, thus hurting investment, job creation and subsequently growth in the currency area.
As Europe slipped into deflation, the European Central Bank (ECB)had to unveil a stimulus plan last week, including sovereign and private asset
purchases to the tune of 60 billion euros ($68 billion) per month until
September 2016.
The move is intended to kickstart the eurozone economy and, subsequently, inflation by pumping the money into the banking sector on hopes it will trickle down to the real economy.
