Eurozone inflation stable

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Eurozone inflation stable

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Consumer price inflation in the eurozone stabilised in January. It was at 2.7 percent for the second straight month

That is down from last year’s peak and makes it more likely the European Central Bank will cut interest rates to help revive the region’s economy.

Inflation was unchanged as rising unemployment cut into household spending and pushed businesses to freeze or reduce prices.

Although the January reading was only a first estimate by the European Union’s statistics office Eurostat, economists see inflation slowing over the next few months as many of the eurozone’s 17 nations slip into a brief recession in 2012.

With a benign outlook, economists also expect the ECB to take rates below one percent for the first time ever in the coming months, perhaps as early as the bank’s meeting on February 9.

Inflation is still above the ECB’s target of below, but close to two percent, which the Frankfurt-based bank judges to be right for price stability and a healthy economy.

But full inflation data in December showed that after stripping out volatile energy prices — driven up by crude oil globally over concerns about a supply disruption in Iran — core inflation was 1.9 percent in December.

Supporting that, Spanish inflation rose less than expected in January to 2.0 percent, separate data showed on Tuesday. Germany, the eurozone’s largest economy, reported slowing consumer price rises on Monday.