Eurozone inflation slows to five-year low in September

Image source, Reuters

Image caption, It is the lowest level for Eurozone inflation since October 2009.

Eurozone inflation slipped again in September, with prices rising at their slowest rate in nearly five years.

Consumer price inflation rose by just 0.3% compared to the same month last year, slowing from August's 0.4% rise, said EU statistics agency.

It is the lowest level for eurozone inflation since October 2009, adding to fears of a deflationary spiral.

Inflation has been persistently below the European Central Bank's (ECB) 2% target rate.

Eurostat said falls in the prices of unprocessed food and energy had driven the overall slowdown.

Unprocessed food prices fell 0.9% year-on-year, while energy dropped 2.4%.

Earlier this month, the European Central Bank cut its benchmark interest rate to 0.05%, and introduced new stimulus measures in an attempt to kick-start the eurozone economy.

However, the dramatic move fell short of a programme of buying government bonds - a process known as quantitative easing (QE), and one which the US Federal Reserve has undertaken.

Unemployment steady

Hargreaves Lansdown senior economist Ben Brettell said inflation was now "perilously close to zero", and put pressure on the ECB to do even more.

"Today's drop in consumer price inflation heaps further pressure on Mario Draghi to engage in QE. I believe he will succumb to this pressure eventually," he added.

Mr Draghi is expected to give further details of the ECB's new stimulus measures when its governing council meets on Thursday.

Separately, Eurostat also reported that unemployment in the eurozone remained steady at 11.5% in August, unchanged from July.

But, the number of people looking for work in the region's largest economy, Germany, increased by a seasonally-adjusted total of 12,000 in September, data from the national labour office showed.

However, analysts said the rise was not a big cause for concern just yet.

"Although (the data) suggest that the German job market have lost a bit of steam recently, it remains in good health," Natixis economist Johannes Gareis said.

Germany's jobless rate at 6.7% is close to a post-reunification low.