MW: Eurozone inflation falls unexpectedly in August
FRANKFURT--Inflation across the eurozone unexpectedly weakened in August, a development likely to fuel speculation that the European Central Bank may have to expand its bond-buying program.
The annual rate of inflation declined to 0.1% in August from 0.2% July, the European Union's statistical office said Wednesday. That marks a downward revision to Eurostat's flash estimate of 0.2% and pushes annual inflation further away from the ECB's target of just below 2%.
The ECB has already indicated that it is prepared to expand its bond-buying program beyond September 2016. Such a move could become necessary if inflation weren't return to the ECB's medium-term target, as currently envisaged by the bank.
There were more signs of easing inflationary pressure Wednesday, as Eurostat reported slowing growth in labor costs across the bloc. Eurozone labor costs, for every hour worked, rose 1.6% in the second quarter from the same period last year. Gross wages rose 1.9%, while non-wage costs were up 0.4% over this period. In the first quarter, labor costs had increased by 1.9%.
