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Eurozone inflation unchanged at 0.2 percent

Eurozone inflation remained unchanged at a lower rate than expected. Lower energy costs helped keep inflation at bay across the 19-country eurozone economy in 2015.

Inflation figures for December 2015 were dragged down in particular by reduced energy prices, primarily caused by oil's low prices. Official figures showed that consumer price inflation remained steady at 0.2 percent for the second month running. The rate was positive for a third successive month but stayed below analysts' predictions of a slight increase to 0.3 percent.

The data from the EU's Eurostat statistics agency is much lower than the European Central Bank's (ECB) official target of two percent. Core inflation, which ignores fluctuating energy prices as well as alcohol and tobacco, remained stable at 0.9 percent from November 2015.

False economy

While stagnant or falling prices might appear to be good for consumers, it can result in deflation if consumers continue to delay their purchases - expecting prices to fall further. This, in turn, can prompt companies to hold off investment or to lay off staff.

According to European Commission predictions, inflation is expected to rise to around 1 percent in the course of the year.

The ECB cites the bloc's stagnant inflation as its main reason for an aggressive monetary policy built around so-called "quantitative easing" - which involves the ECB printing billions of euros each month and using this new money to underwrite eurozone sovereign debt. The practice, opposed by Germany's Bundesbank, only cleared a legal challenge last summer.

ss/msh (AFP, AP, dpa)

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