Current situation Euro area consumer price inflation currently stands at 1% (August 2019, year-on-year HICP inflation) and is thus considerably below our inflation aim. Unfortunately, this low inflation has been a persistent phenomenon. Since November 2011, when euro area inflation peaked at 3% (year-on-year HICP inflation), the average rate has been less than 1.2% per annum. Long-term inflation expectations are also low.
Market-based indicators are stagnating at historically low levels. The five-year five-year inflation-linked swap rate has been hovering around 1.25% in recent weeks. Survey-based measures have also fallen recently, to 1.7%. While these numbers are higher than those for market-based indicators, we shouldn’t take comfort from them.