The eurozone is edging ever closer to deflation. Prices across the 18-country single currency area rose by just 0.4% in the year to July, according to the flash estimate of the cost of living. That was down from 0.5% in the year to June, and the weakest figure for almost five years. Some eurozone members, such as Spain, are already reporting that prices are lower now than they were a year ago.

This represents a problem for the European Central Bank, which has found that traditional monetary policy – cutting interest rates – is less effective in a low inflation environment. That's because in normal times monetary policy works through negative real interest rates – the cost of borrowing is below the inflation rate. That is impossible when prices are falling, as the Japanese have found over the past two decades.

The latest fall in inflation is therefore bound to prompt speculation that the ECB will soon come up with its own version of quantitative easing, the money creation device used by the US Federal Reserve, the Bank of England and the Bank of Japan. QE is designed to stimulate activity in two ways: by providing commercial banks with more scope to lend and by cutting the long-term cost of borrowing.

But those expecting early action from the ECB will be disappointed. It is only a couple of months since Mario Draghi, the ECB's president, announced something akin to Threadneedle Street's funding for lending scheme: sticks and carrots to increase bank lending to the private sector. The German Bundesbank is adamant that the ECB initiative is adequate to deal with the current low level of inflation, and that only an unexpected deterioration in the eurozone economy leading to more pronounced deflationary pressure would warrant QE.

The recent fall in the value of the euro, which will boost exports and should also increase inflation, will be seen by the Bundesbank as another reason for the ECB to be cautious.

That said, eurozone inflationary pressures remain extremely weak. Despite the small fall in unemployment to 11.5%, there is still a large amount of slack in the labour market that will prevent wage pressures from growing. The cost of energy on world markets will be lower this autumn than it was in late 2013. There will be no QE from the ECB in 2014. But the issue has not gone way. Expect it to resurface next year.