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Eurozone inflation falls to four-year low of 0.7%

AFP | Last Updated: Thursday, October 31, 2013 - 18:20

Brussels: The annual rate of inflation across the 17-country eurozone fell to 0.7 percent in October, its lowest for four years, according to an initial estimate, the EU`s data agency Eurostat said Thursday.

The rate fell from 1.1 percent in September, just below the 1.2 percent announced a day earlier in the eurozone`s top economy of Germany and Spanish data which indicated a drop into deflationary territory there.

"The last time the eurozone inflation rate was as low as 0.7 percent was in November 2009," a Eurostat spokesman said.

Energy prices fell by 1.7 percent in October, deeper than the 0.9 percent decline in September.

Compared to an analysts` consensus of 1.1 percent, the rate fell "unexpectedly sharply" in the view of Capital Economics` London-based analyst Ben May.

"The latest eurozone inflation and unemployment figures (another record 12.2 percent for September) will increase pressure on the European Central Bank to take further action to support the economy," May said.

The ECB defines price stability as increases in household and consumer inflation of close to but just below 2.0 percent.

May stressed that energy, food and core inflation all fell.

Core inflation, a the key measure for specialists that excludes volatile energy and food prices, fell by 0.8 percent, touching a record low level.

On Wednesday, data showing a non-harmonised inflation figure that serves as a benchmark in Spain indicated deflation there for the first time for four years, with prices falling by 0.1 percent.

Analysts from Spanish group Renta 4 said this was a "sign of the weakness" of the recovery.

First Published: Thursday, October 31, 2013 - 18:20
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