Inflation in the 19-country eurozone remained unchanged at a lower than expected 0.1 percent in November, giving further encouragement to the European Central Bank (ECB) to pump up its monetary stimulus.
The EU's Eurostat statistics agency said inflation was unchanged in November at a weak 0.1 percent, lower than analysts' forecast of 0.2 percent inflation for the period. The figure is also well below the ECB's official target of near or just below 2.0 percent.
Inflation in November was dragged down by energy prices, led by oil, but this fall slowed to 7.3 percent annually instead of 8.5 percent the previous month, the data showed.
"November's weaker-than-expected euro-zone consumer prices figures give a final green light for the ECB to both increase the pace of its asset purchases and cut its deposit rate at tomorrow's policy meeting," said Jonathan Loynes, Chief European Economist at capital Economics.
In March, the ECB launched a more than one-trillion-euro stimulus plan running through to September next year in order to snap a long period of low or negative inflation in the eurozone. But the effects of that policy have now shown its limits, pushing the ECB toward further easing of monetary policy.
ECB to boost firepower
Analysts expect ECB president Mario Draghi to ramp up the central bank's contested bond-buying program on Thursday given the low inflation level.
Draghi on November 20 said the bank will "do what we must" to lift inflation as quickly as possible.
Central bankers of the 19-member eurozone are keen to fight falling prices because they can be poisonous for the economy, creating a vicious circle of falling demand and fewer jobs.
Most worryingly for the ECB will be the fall in core inflation, which excludes oil and food. This went to 0.9 percent from 1.1 percent a month earlier.
Howard Archer of HS Global Insight told the news agency AFP: "Consequently, there can be little doubt that the ECB will press ahead with further stimulus at its December meeting on Thursday."
Following Eurostat's inflation data, the euro immediately fell to a low for the day, dropping 0.42 percent against the US dollar to $1.0588 in London trade.
uhe/jd (AFP, dpa, Reuters)