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Business

Eurozone inflation worries ease further in August

Despite a loose eurozone monetary policy, fears of the flood of cheap money stoking inflation appear unfounded. Less expensive fuels further slowed the pace of inflation in August to its lowest level in several months.

The prices of goods and services in the 17-nation eurozone rose 1.3 percent in August compared with the same month a year ago, according to the latest figures released by the EU statistics office Eurostat on Monday.

Month-on-month, August prices went up significantly less after a rate of 1.6 percent in July, marking the slowest pace of increase in four months, Eurostat data showed.

The slowdown was the result of lower energy prices in the course of this year, according to a Eurostat statement, which had dropped 0.3 percent.

However, the effects of the long winter and severe floods in many eurozone countries earlier in 2013 were still felt. In August, this resulted in higher food prices, increasing 3.2 percent on the month.

European Central Bank (ECB) chief Mario Draghi said inflation pressures would remain subdued for the rest of the year, despite the bank's accommodative monetary policy.

Under efforts to overcome the severe recession in most eurozone countries, the ECB has lowered interest rates to a historic low of 0.5 percent and has boosted money supply with a bond-buying program.

According to an ECB estimate, prices in the 17 nations using the euro are expected to rise 1.4 percent this year and 1.3 percent in 2014 - well below the 2 percent limit, under which the central bank considers prices to be stable.

Inflation in the wider, 28-member EU also fell to 1.5 percent in August, down from 1.7 percent in July, Eurostat said.

uhe/dr (Reuters, AFP, dpa)