Luxembourg City, Luxembourg (4E) – Inflation in the euro area fell to its lowest level since February 2010, primarily because of lower energy costs.
The Luxembourg-based European Union statistics office said in a preliminary estimate released Thursday that the annual rate dropped to 0.7 percent in October, the lowest level since November 2009, from 1.1 percent in September. The figure is in line with the median forecast of 1.1 percent by 42 economists in a Bloomberg News survey.
Core inflation, which excludes cost of tobacco, food and energy, also dropped from an annual rate of 1.4 percent to 1.1 percent.
The European Central Bank (ECB) has said price growth has a “subdued outlook” in the 17-nation common currency area, and October marks the ninth consecutive month that the rate is below its 2 percent target. While the economy has emerged from a recession and economic indicators have improved, unemployment continues to climb and the central bank predicts recovery will only be gradual.
The unemployment rate in the euro zone remained unchanged from the August figure, although the rate for that month was revised up to 12.2 percent.
Thursday’s report also showed that energy prices fell an annual 1.7 percent this month after declining 0.9 percent in September. Prices of tobacco, alcohol and food climbed 1.9 percent, easing from the previous month’s 2.6 percent pace, while the cost of services jumped 1.2 percent.