Eurozone inflation drops in January, unemployment stays near record high

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Eurozone inflation drops in January, unemployment stays near record high

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Eurozone consumer price inflation dropped in January.

It slipped to 0.7 percent year-on-year, down from 0.8 percent in December

Economists had expected it to rise.

A big part of the fall came from highly volatile energy prices fell, while the cost of food, alcohol and tobacco products increased.

The decline provides a possible trigger for further interest rate moves by the European Central Bank to sustain a fragile recovery and fend off deflation.

The ECB’s sensitivity to inflation data was already high and even a small surprise like this one today might tip the balance towards more easing,” said Frederik Ducrozet, a senior euro zone economist at Credit Agricole.

“I would not expect action next week, rather a stronger wording for a possible cut later, possibly in March,” he added, referring to the ECB’s February 6th meeting.

Separately we learned that the unemployment rate in the eurozone remained near a record-high 12 percent for the third month running.

Some 19 million people are out of work in the region, slowing the uneven recovery as Europeans remains cautious and thrifty, proving only a limited boost to economic growth.

“The job crisis is far from over and efforts must continue at EU level and in member states to fight this scourge and ensure an inclusive and sustainable recovery,” EU Employment Commission Laszlo Andor said in a statement.