Eurozone Inflation Steady At 0.2%

Eurozone inflation remained unchanged at a very low level in August as further fall in oil prices curbed its ability to move upward.

Inflation came in at 0.2 percent in August, the same rate as seen in July and June, preliminary data from Eurostat showed Monday. It was forecast to ease to 0.1 percent.

Inflation remains well below the European Central Bank's target of 'below, but close to, 2 percent over the medium term'.

Excluding energy, food, alcohol and tobacco, core inflation remained stable at 1 percent in August, while it was expected to ease marginally to 0.9 percent from a 15-month high.

Stable inflation in August eases pressure on the ECB to consider increasing its stimulative efforts at its September policy meeting on Thursday, such as by front-loading more its quantitative easing program, IHS Global Insight Economist Howard Archer said.

He expects policymakers to sit tight despite the current increased concern that events in China could have an impact on Eurozone growth.

ECB policymaker Peter Praet last week said downside risks to inflation have increased and the bank is willing to expand its bond purchase program, if needed. The current QE program of buying EUR 60 billion bonds a month will run until September 2016.

The ECB will release its latest inflation and growth outlook after the Governing Council meeting on September 3.

Among components of consumer prices, prices of food, alcohol and tobacco rose 1.2 percent annually after increasing 0.9 percent. Likewise, non-energy industrial goods price inflation improved to 0.6 percent from 0.4 percent.

Cost of services climbed 1.2 percent, same as in June. Meanwhile, energy prices plunged 7.1 percent, faster than the 5.6 percent fall a month ago. Full data for August is scheduled for release on September 16.

In Germany, EU harmonized inflation held steady at 0.1 percent in August. On the other hand, Italy's inflation rose to 0.5 percent from 0.3 percent.