BRUSSELS: Euro zone consumer prices plunged by an alarming 0.6% in January due to falling oil prices, accelerating further into negative territory and confirming deflation could be settling-in for the long term, EU data showed.
It follows a decision by the European Central Bank last week to launch a €1.14 trillion bond-buying spree to drive up inflation in the euro zone.
Today’s fall comes after a 0.2% decline in December. The figure was below expectations for a decline to -0.5%.
The euro zone has only endured negative inflation rates in one other period, from June to October 2009. The 0.6% decline this month matched the lowest figure during that period, in July 2009.
Sharply reduced fuel costs explained the drop. Energy prices plunged 8.9% in the month. Unprocessed food was 0.9% cheaper, outweighing a 1.0 percent rise in the cost of services.
Oil prices have more than halved since June, with Brent at just below $50 a barrel today.
Core inflation, which excludes volatile energy and unprocessed food prices, dipped to 0.6% in January from 0.7% for the previous three months.
Headline inflation has also been in what the ECB calls the “danger zone” below 1% since October 2013. The ECB aims to keep inflation just under 2% over the medium term.
The ECB plans to purchase sovereign debt from March this year until September 2016, releasing €60 billion a month into the economy. Germany this month joined the countries with negative inflation rates this month.
In Spain, consumer prices fell for a seventh consecutive month and at their fastest rate in the euro zone era.
In separate release, Eurostat said euro zone unemployment dipped to 11.4% in December, after three months stuck at 11.5%
This was the lowest level recorded since August 2012.
Today’s figures show that the number of people without a job decreased by 157,000 from a month before to 18.129 million.
EU countries with the lowest unemployment at the end of 2014 were Germany (4.8%), Austria (4.9%) and the Czech Republic (5.8%).
Today’s figures also reveal that Irish unemployment rates fell in 2014, from 12.1% in December 2013 to 10.5% in December 2014.
This means there were 35,000 fewer unemployed people registered at the end of 2014 than in December of the previous year.
Irish youth unemployment stood at 21.6% at the end of 2014, down by 4.2% from the previous end-of-year figure of 25.8% in 2013.
The highest youth unemployment levels in the EU was in Spain (51.4%), Italy (42%), and Portugal (34.5%).
No figures beyond October 2014 are available for Greece, when the figure was 50.6%.
