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German inflation stuck at 0.8% for fourth month in a row

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Inflation in Germany, Europe's biggest economy, remained at the low level of 0.8 per cent for the fourth month in a row in October, final data showed on Thursday.

[FRANKFURT] Inflation in Germany, Europe's biggest economy, remained at the low level of 0.8 per cent for the fourth month in a row in October, final data showed on Thursday.

Confirming an earlier flash estimate, the federal statistics office Destatis calculated that German inflation stood at just 0.8 per cent year-on-year last month, unchanged since July.

The last time inflation in Germany fell below 0.8 per cent was in February 2010.

Using the Harmonised Index of Consumer Prices (HICP) - the yardstick used by the European Central Bank - inflation in Germany was even lower at 0.7 per cent in October, way under the ECB's annual inflation target of just below 2.0 per cent.

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The chronically low level of inflation across the 18-nation eurozone has fuelled concern the region could slip into deflation - a sustained and widespread drop in prices that hampers economic activity and threatens job losses.

While falling prices may sound good for consumers, deflation can trigger a vicious spiral where businesses and households delay purchases, throttling demand and causing companies to lay off workers.

Such concerns persuaded the ECB to cut interest rates to a new all-time low and roll out other anti-deflation measures such as a series of liquidity programmes to inject cash into the economy.

AFP

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