The Governing Council of the European Central Bank has recently defined price stability as a rise in the (harmonised) consumer price level of less than 2%.
On the one hand, this definition, which is in line with that used in most countries of the euro area, implies that measurement errors occur while, on the other, it stresses that it is one of the tasks of the European System of Central Banks to prevent deflation. Some caution is in order when it comes to using the word “deflation”.