Euro zone inflation falls in Feb

Brussels, March 2, 2013

Inflation fell in the euro zone in February and joblessness rose to an all-time high, highlighting the impact of the bloc's debt crisis.

Annual inflation in the 17 countries sharing the euro was 1.8 per cent in February, the EU's statistics office Eurostat said yesterday, around the European Central Bank (ECB)'s target of below but close to 2pc, and by more than expected.

January's unemployment rate, meanwhile, rose to 11.9pc in the bloc, up from 11.8pc in December, with another 201,000 people out of work, Eurostat said separately.

The sombre economic situation will likely weigh on the ECB's governing council when it meets Thursday, and while only a minority of economists see any early move to cut the bank's benchmark rate below the current 0.75pc, consumer prices are no longer an issue.

"Inflation is just not a concern, it is not a reason why policy makers would hesitate to cut interest rates," said Sarah Hewin, head of European research at Standard Chartered.

Economists expected inflation to fall to 1.9pc. The reading compared to 2pc in January.

While the slowing pace of price increases may make it easier for Europeans to buy food and clothing, it is little comfort to the record 19 million people unemployed in the euro zone.-Reuters

Tags: inflation | Euro zone |