Not so fast, market analysts and economists warned, arguing that markets were extrapolating the wrong conclusions from the data.
"The big concern is that the market may well be getting ahead of itself in its expectations," Michael Hewson, chief market analyst at CMC Markets U.K., said in a note Thursday.
"Given that core prices (that exclude energy, food, alcohol and tobacco), actually rose to 0.8 percent, reinforcing the effect that the volatile nature of energy prices is having on headline prices."
Despite the headline deflationary figure grabbing markets' attention, a senior economist at Schroders, Azad Zangana, said: "There are few signs that the domestic European economy is becoming more deflationary."
"Consumer confidence remains reasonably high, while inflation expectations have not fallen to significantly low levels," he said in a note. "Also, retail sales have held up well, suggesting households are not delaying spending in order to take advantage of falling prices -- the behavioral changes associated with the start of a prolonged deflationary period, like that experienced in Japan."
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