Inflation across the 17 countries that use the euro fell further below target in September, official figures showed Monday, news that could encourage the European Central Bank to cut interest rates again if the recovery across the eurozone stalls.
Eurostat, the EU’s statistics office, said consumer prices were up 1.1 percent in the year to September, down from the 1.3 percent rate recorded the previous month. September’s rate was also the lowest since early 2010 and below expectations — the consensus in the markets was for a more modest decline, to 1.2 percent.
The statistics agency said energy and food prices drove the fall in September. However, the core rate — which excludes food, alcohol and tobacco — also fell, to 1 percent from 1.1 percent, further proof that underlying price pressures are benign.
The inflation figures will likely be discussed this week, when the ECB holds its monthly meeting.
Though the ECB is tasked with setting monetary policy to keep inflation at just below 2 percent, few economists think the central bank’s governing council will reduce its benchmark rate further from the record-low of 0.5 percent, amid signs that the eurozone economy is recovering.
In the second quarter of 2013, the eurozone economy grew by a quarterly rate of 0.3 percent, largely on the back of Germany, Europe’s biggest economy. That followed six straight quarterly declines, the region’s longest recession since the euro currency was launched in 1999.
However, recent economic indicators have suggested that the recovery is proving more broad-based — even Greece is expected to start growing soon.