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Eurozone inflation dips

Eurozone inflation dips
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Inflation in the eurozone fell more than previously expected in December.

Consumer prices in the 17 countries sharing the euro rose 2.7 percent compared with the same month a year earlier.

Not including volatile energy costs, inflation was 1.9 percent, and stripping out food and fuel it was 1.6 percent.

That should give the European Central Bank more room to cut interest rates as the region’s economy heads for recession.

The bank made two 0.25 percent cuts after Mario Draghi took over as president in November before holding fire this month.

Many economists expect it to take rates below 1.0 percent for the first time ever in the coming months but comments by Governing Council member Ewald Nowotny published on Tuesday hinted that the bank was in no hurry to move again.

“We are all agreed that now the point is to allow these measures to take full effect. Only then will we take further decisions,” he told the Wall Street Journal’s German website.

“For the ECB ‘We never precommit’ always applies, but there are no plans whatsoever at the moment.”

The weakening economy and rising unemployment across the region are cutting demand for goods and with it pressuring retailers to reduce prices. That has offset continuing high prices for crude oil globally due to concerns about a supply disruption in Iran.

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