In spite of European Central Bank's (ECB) sincerest efforts disinflation and threat of deflation still remains rampant across Euro zone, which is hiding behind headline positive inflation report.

In June European monetary union headline annual inflation came at 0.2% and for whole European Union it came at 0.1%.

This year after many measures (rate cut, LTRO) over the past few, ECB introduced PSPP (public sector purchase program), which will buy bonds at € 60 billion per month in a bid to push European economies to reflation.

Despite rise in inflationary expectations, hard evidence shows disinflationary/deflationary threat continues to linger especially in weaker economies.

• In Cyprus, annual inflation was -2.1% followed by Greece at -1.1%. Both these countries are weakest in Euro area.
• Deflation was also reported in Slovenia (-0.9%), Lithuania (-0.2%).
• In Spain, despite its blockbuster growth prices failed to grow at all in June.
• In economic power houses like France and Germany inflation remained subdued at 0.3%.

Highest annual inflation rates were recorded in Malta (1.1 per cent), Austria (1.0 per cent) and Belgium (0.9 per cent).

With ECB asset purchase and low inflation Euro is likely to remain weak against dollar. Euro is currently trading at 1.09 against dollar.