The latest data from Eurostat has revealed that deflation is still occurring across Europe. In February, negative annual rates were observed in Bulgaria (-2.1%), Cyprus (-1.3%), Greece (-0.9%), Croatia (-0.2%), Portugal and Slovakia (both -0.1%).

The highest annual rates of inflation were recorded in Malta and Finland (both 1.6%) and Austria (1.5%). Compared with January, annual inflation fell in seventeen Member States, remained stable in three and rose in seven.

Inflation across the 18-country Eurozone has been revised down to its lowest level since October 2013, a development that may ratchet up the pressure on the European Central Bank to cut interest rates further.

The unexpected drop in the inflation rate is likely to reinforce concerns in the markets that the Eurozone as a whole may suffer a bout of deflation, or falling prices.

Deflation can weigh on an economy in a variety of ways, mainly by encouraging consumers to delay purchases in the hope of cheaper bargains further down the line. This is especially true in the property market.