Bye bye deflation.

The eurozone boasted its first month of rising inflation across all its member states in nearly four years in January, underscoring policymakers’ victory against deflation after two years of stimulus measures.

January figures from Eurostat confirmed a 1.8 per cent rise in annual eurozone consumer price inflation compared to the same month in 2016 – a four-year high. The rate accelerated from 1.1 per cent in December.

More significantly, all of the bloc’s constituent economies notched up rising inflation having been blighted by three years of weak and negative prices. It was the first month without deflation since February 2013.

Inflation has been on the march across Europe at the start of the year, driven higher by the fading effect of falling energy prices on the annual inflation basket.

Despite today’s milestone, the figures still mask sharp divergences between member states. Ireland recorded the lowest annual inflation rate at 0.2 per cent while Belgian prices were the highest at 3.1 per cent. Germany’s headline inflation has surged to 1.9 per cent while Italy is at 1 per cent.

The European Central Bank is approaching the two-year anniversary of its unprecedented stimulus programme, designed to lift growth and prices across the bloc and which has seen it snap up €1.5tn of eurozone assets.

In December, president Mario Draghi proclaimed an end to the threat of the eurozone tipping back into deflation.

Deflation, or contracting price growth, pushes up debt burdens in an economy and can lead to consumers delaying spending.

Still, the ECB has not yet declared victory in its inflation battle. Its forecasts show that price rises will fall below a target of just under 2 per cent by 2019. Senior policymakers have said much of the recent surge in inflation is down to transitory factors such as volatile oil prices.

Eurozone core inflation – which strips out food and energy – has remained stubbornly below 1 per cent since March 2016.

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