Euro-Zone Inflation Plummets in February

[rodbarnett]

BRUSSELS, Belgium (AP) - The euro zone's annual inflation rate fell sharply to 1.6 percent in February, its lowest level since November 1999 and well below the European Central Bank's target for price stability.

The drop in the inflation rate leaves the bank room to cut interest rates, should it decide to take action to limit the euro's appreciation against the dollar and boost weak consumer spending.

A decline had been expected, but the size of the drop exceeded most economists' expectations. The preliminary estimate published by the European Union statistics agency Eurostat didn't give details of what drove the sharp decline, but a drop in energy prices appeared to be the main factor.

According to final figures for January also published Friday, inflation in the 12-member currency area fell to 1.9 percent from 2 percent.


http://ap.tbo.com/ap/breaking/MGAE9IZB6RD.html

[Kolesar]

1. Dollar falls -> Relative Price of Oil falls -> Inflation falls for Europe

Since most of OPEC prices oil in dollars, Europe got handed a bonus.

[htuttle]

2. I saw a chart last week

...that showed the cost of a barrel of oil in Euros over the last 2 years.

It was almost straight across -- about 23-24 euros per barrel since 2002; all the while, the dollar was dropping and dollar price of oil was going up.

Face it -- OPEC has already switched to pricing in Euros. They just haven't announced it yet because they don't want to lose their dollar investments to a run on the dollar.

The US gas price is basically at the mercy of the currency traders now.

[muriel_volestrangler]

3. Oil has stayed about the same price in Euros

but there might be something in:
Dollar falls
Chinese yuan and Japanese yen fall with it
Japanese, Chinese and American imports to Eurozone become cheaper