EU's Almunia sees inflation down, stagflation risk

HELSINKI, July 18 (Reuters) - Inflation in the euro zone can drop to close to 2 percent next year, but there is still a risk of stagflation, the EU's monetary affairs commissioner was quoted as saying on Friday. 'The future (of inflation) depends solely on what happens on the global markets. It is anyhow possible that next year inflation could be close to the ECB target level,' Joaquin Almunia told Finnish daily Kauppalehti. ECB targets inflation of below but close to 2 percent. Almunia said: 'Although there is a risk of stagflation and I am worried about it, I hope we can avoid the difficult situation.' He also said economic growth in the EU had weakened in the second quarter and that inflation and market uncertainty had an impact on growth. (Reporting by Sakari Suoninen; Editing by Ben Tan) Keywords:... [read full story]