Calls for European Central Bank action to help protect the eurozone’s fragile recovery have grown after the release of inflation and jobless data.
Official figures showed that eurozone inflation fell to 0.7% in January, down from 0.8% in December and further below the ECB’s 2% target.
It has fuelled worries about whether the euro bloc could suffer deflation, potentially de-railing economic growth.
Separate data showed the unemployment rate in December was unchanged at 12%.
Downward spiral
The European Union’s statistics agency, Eurostat, said that although there was a 1.7% rise in the cost of food, alcohol and tobacco in January, energy costs fell 1.2%.
Many economists had forecast the eurozone’s inflation rate would rise slightly in January. The rate last touched 0.7% in October, which was the lowest reading for the 18-nation eurozone in almost four years.
Concerns about possible deflation – where the price of goods and assets are locked in long-term decline, hitting corporate profits, wage growth, and tempting consumers to delay purchases in the hope of further falls – have grown in recent months.
At last week’s World Economic Forum, in Davos, Christine Lagarde, head of the International Monetary Fund, said eurozone inflation was “way below” target and that the risks to the bloc’s fragile economic recovery should not be ignored.
Mario Draghi, president of the ECB, has said that although inflation was “subdued, and expected to remain subdued” for about two years, he was confident that it would return to target. But he added that the ECB was ready to act if necessary.
Meanwhile, separate figures from Eurostat on Friday showed there were about 19.1 million jobless in the eurozone in December, down 129,000 from November 2013, but up 130,000 from December 2012 when the debt crisis was at its peak.
Eurostat also said the unemployment rate for November had been revised down from 12.1% to 12%.
BBC
